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Qatar flooded banks with $8 bln in August to offset outflows

DUBAI, Sept 19 (Reuters) - Qatar pumped 29.1 billion riyals ($8 billion) into its banking system in August to cushion it from withdrawals by financial institutions from neighbouring Arab states due to the Gulf's diplomatic crisis, central bank data showed.

The current crisis, triggered by the political and economic boycott of Qatar by the United Arab Emirates, Saudi Arabia, Bahrain and Egypt, had already led to government deposit injections of $6.9 billion in July and $10.9 billion in June.

The Saudi-led bloc accuses Qatar of supporting terrorism, a charge denied by Doha.

Total deposits at Qatari banks rose to 793.6 billion riyals in August compared to 772.5 billion riyals in July as public sector deposits climbed to 302.6 billion riyals, up from 273.5 billion riyals in July, the data showed on Tuesday.

That represents additional inflows of 29.1 billion riyals from Qatar's public sector in August from a month earlier. The data did not indicate which public sector entities had deposited these funds at Qatar-based banks.

Foreign customers deposits at banks in Qatar - mostly in foreign-currency deposits - fell to 148.97 billion riyals in August from 157.2 billion riyals in July.

Reuters had reported that Qatar's sovereign wealth fund, the Qatar Investment Authority (QIA), had deposited fresh funds in its banks as Gulf investors withdrew deposits from Qatari banks and pulled funds out of Doha's stock market.

Qatar's central bank chief said in July the country had $340 billion in reserves that could help it to weather the isolation by its powerful neighbours. ($1 = 3.6405 Qatar riyals) (Reporting by Saeed Azhar; editing by Alexander Smith)