The Central Bank of Kuwait has assured the public that the country does not face a scarcity of foreign currency levels. The bank explained that the bulk of the state’s revenues come from oil, which is paid in US dollars. These revenue streams, along with the foreign reserves available to the state, provide ample liquidity to support the country’s foreign currency requirements.
In line with these efforts, the Ministry of Finance purchases dinars from the Central Bank to meet the requirements for implementing the state’s general budget. The Ministry then deposits the equivalent amount in dollars into the bank’s account, continuously enhancing its foreign reserves.
This approach reinforces the exchange rate policy, which aims to maintain the stability of the dinar exchange rate and promote monetary stability. Moreover, the Central Bank receives data from local banks regarding the volume of their purchases and sales of dollars to their customers. This information is primarily used for statistical purposes and estimating demand expectations for foreign currency.
It is not intended to impose restrictions on transfers, as Kuwait has an open economy with no limitations on external transfers. The positive economic indicators emphasize Kuwait’s stance against imposing foreign transfer restrictions. The data released by the Central Bank indicates a decrease in the value of Kuwait’s official reserve assets by the end of October for the second consecutive month.
However, these figures exclude the external assets of the General Investment Authority, estimated at $803 billion. Despite these fluctuations, the Central Bank maintains an efficient exchange rate policy without sudden fluctuations or speculative pressure on the dinar, thanks to continued accumulation of foreign reserves.
The Central Bank’s monetary policy focuses on managing interest rates and creating an environment conducive to economic growth. This policy aims to strengthen the attractiveness of the dinar against foreign currencies, while also bolstering the deposit base in the national currency to finance various sectors of the economy.
Experts from the International Monetary Fund have commended Kuwait’s exchange rate policy as appropriate for the country’s economic situation. Addressing concerns about money laundering and terrorist financing, the sources clarified that banks and financial institutions are responsible for monitoring the movement of money transfers by their customers.
If banks have sufficient evidence to suspect any transaction, they are obligated to notify the Kuwait Financial Investigation Unit promptly. The Central Bank does not monitor external and internal transfers but focuses on its assigned role in ensuring financial stability and overseeing the overall monetary policy.
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