Kuwait’s resilient reserves safeguard over 13 months of imports despite dip

Kuwait’s foreign currency reserves started the New Year on a downward trend, dwindling to 12.64 billion dinars by the end of January. This marks a monthly decrease of 2.59%, equivalent to 337 million dinars, compared to the 12.98 billion dinars recorded at the conclusion of December 2023, as reported in the Central Bank of Kuwait’s monthly bulletin for January 2024.

Annually, the foreign currency reserves fell by 511 million dinars, marking a decrease of 3.88% compared to the levels observed in January 2023, which stood at 13.15 billion dinars.

Kuwait’s foreign currency reserves comprise cash balances, accounts, bonds, certificates of deposit, treasury bills, and foreign currency deposits held by the Central Bank of Kuwait. When measured as liquid reserves, they are sufficient to cover Kuwait’s import requirements for over 13 months, surpassing the global average by fourfold. The recommended safe threshold for liquid foreign currency reserves, excluding gold, is to cover three months’ worth of the average import value.

As in previous years, Kuwait’s gold reserves remained unchanged at 79 tons, as reported by the World Gold Council. The book value of this gold quantity held by Kuwait is 31.7 million dinars, determined by the prices at the time of purchase rather than the current market value.

According to the monthly bulletin, the bank’s total assets reached 12.97 billion dinars, divided among liquid foreign reserves, which constitute the vast majority at 12.64 billion dinars, along with gold reserves valued at 31.74 million dinars and other reserves totaling 292.83 million dinars.

Total assets fell by 2.63% in January compared to the 13.32 billion dinars recorded at the end of December. Foreign assets serve as an indicator of the strength of the external financial position and the ability to withstand pressures on the local currency.