In Kuwait, the black market for currency exchange has recently witnessed a substantial increase in illicit financial transfers, affecting approximately 11 countries due to speculation outside the official system.
The Egyptian pound, Indian rupee, Philippine peso, Bangladeshi taka, and Lebanese and Syrian pounds are among the most sought-after currencies in the black market. Even currencies from countries like Iran trade at dual prices, though with narrower margins.
Sources reveal that the list of speculative currencies extends beyond nations facing economic pressures, encompassing countries with weak banking infrastructure or those where major exchange companies have closed transfer windows. This situation prompts citizens to turn to currency traders for better rates and, at times, added conveniences, saving both time and effort.
With major exchange companies restricting financial dealings with nations in political or military turmoil, such as Syria, Iran, Yemen, Sudan, Libya, and Iraq, the black market and smaller exchange offices find a broader opportunity to attract remittances from citizens of these countries. Exchange companies report a significant decline in customer transfers, with black market traders reportedly consuming about 90 percent of operations.
Of the approximately 500 exchange companies in Kuwait, only about 38 are registered with the Exchange Union, making them the most affected by the black market. Officials observe a surge in currency trader activity, especially in establishments popular among Asian clientele, offering delivery services at more favorable rates than exchange companies, along with additional benefits such as discounted transfer fees.
Sources highlight that black market transfers consistently feature lower price margins compared to the official market, varying by country. The gap between the two markets may range from narrow to as wide as 50 percent, exemplified by the Egyptian pound due to the dollar’s escalating price on the black market. Exchange companies have raised concerns with regulatory authorities, seeking intervention to combat these operations, which may involve suspicions of money laundering.
The expansion of the black market’s influence has rendered the map of money movement incomprehensible, negatively impacting the economy and the operations of exchange companies.
Notably, the clientele engaging in these transfers extends beyond expatriates to include Kuwaitis with financial connections to countries experiencing a surge in black market currency trading.