Central Bank Of Kuwait Imposes Measures To Curb Dollars' Use In Banks And Exchanges

Informed sources report that the Central Bank of Kuwait has informed local banks that it will not cover dollar purchases directed to exchange companies if they are intended for speculation or investment. The Central Bank reiterated its commitment to supply any quantities of dollars required to meet the needs of money transfer customers.

Local banks are permitted to procure dollars to fulfill transactions with their customers, a practice that remains unchanged, according to sources. Banks must now ensure that the dollar amounts acquired from the Central Bank for exchange companies are primarily intended to satisfy the needs of their customers. Any shortfall in this regard must be independently covered by the bank. It was further explained that any purchases of dollars by banks or exchange companies for investment, commercial, or speculative objectives must be covered by the bank or company’s own cooperative resources. In addition to using its existing stock of currency, the Central Bank may also acquire it on the open market or in another manner.

It aligns with the approach taken by other central banks in the region that adhere to a fixed exchange rate with another currency in order to cater to the foreign currency needs of banks. Kuwait's exchange policy for the dinar emphasizes maintaining the relative stability of the dinar's value against other currencies, according to the sources. A specially weighted basket of currencies from countries with significant commercial and financial ties to Kuwait determines the dinar's exchange rate. According to the sources, the Central Bank's policy has been effective in achieving relative stability in the dinar's exchange rate against major global currencies.

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