The Central Bank of Kuwait informed the banks that it will not cover dollar purchases directed to exchange companies if the latter use it for speculation or investment purposes, stressing that it will continue to provide any quantities of this currency that will be directed to cover the needs of customers to carry out money transfer operations,” reports Al-Rai daily quoting banking sources.
The sources added the CBK has informed the local banks that they can continue to buy dollars from it to cover their dealings with their customers, as is currently being implemented without any change, but they must verify that the amounts purchased in dollars are to cover the transactions of exchange companies mainly directed to cover the needs of its customers only, and anything less than that must be covered on its own.
The sources indicated that providing banks or exchange companies’ purchases of the dollar for investment, commercial or speculative purposes must be covered from the own resources of the bank or company concerned, whether from its stock of this currency or through purchasing it through the open market or any other option away from the “central” line, explaining that the latter provides the banks’ foreign currency needs, like the rest of the central banks in the region that follow a fixed exchange rate with another currency.
The sources pointed out that the Kuwaiti Central Bank follows an exchange policy for the dinar that aims to maintain the relative stability of its price against other currencies, explaining that according to this policy it sets the dinar’s exchange rate based on a special weighted basket of currencies of countries that have important commercial and financial relations with Kuwait.
The sources stressed that “the policy implemented by the Central Bank has proven effective in achieving a high degree of relative stability in the dinar’s exchange rate against the major global currencies.”