Kuwait Central Bank Implements Measures to Rein in Dollar Use in Banks and Exchanges

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KUWAIT CITY, Dec 6: The Central Bank of Kuwait has communicated to local banks that it will not cover dollar purchases directed to exchange companies if such acquisitions are intended for speculation or investment purposes, reports Al- Rai daily quoting informed sources. The Central Bank emphasized that it will consistently supply any quantities of the dollar directed towards meeting the needs of customers engaged in money transfer operations.

Sources elucidated that the Central Bank has informed local banks that they are permitted to continue procuring dollars to fulfill transactions with their customers, a practice that remains unchanged. However, banks are now required to ensure that the dollar amounts acquired from the Central Bank for exchange companies are primarily aimed at fulfilling the needs of their customers exclusively. 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 Cooperaresources. This can include utilizing its existing stock of the currency or acquiring it through the open market or other alternatives distinct from the Central Bank’s facilities.

The Central Bank is positioned to cater to the foreign currency needs of banks, aligning with the approach taken by other central banks in the region that adhere to a fixed exchange rate with another currency. Highlighting Kuwait’s exchange policy for the dinar, the sources emphasized its objective of maintaining the relative stability of the dinar’s price against other currencies. According to this policy, the exchange rate of the dinar is determined based on a specially weighted basket of currencies from countries with significant commercial and financial ties to Kuwait. The sources underscored the effectiveness of the Central Bank’s policy in achieving a notable degree of relative stability in the dinar’s exchange rate against major global currencies.

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