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Kuwait lets dinar rise for 1st time this week

By Agencies


Kuwait let its dinar rise for the first time this week on Wednesday after the dollar tumbled against the euro on a unexpected Federal Reserve interest rate cut designed to allay fears of a US recession.
The dinar will trade around a mid point of 0.27310 per dollar, compared with 0.27330, the central bank said, allowing an appreciation of 0.07 per cent.
The Kuwaiti currency fell 0.19 per cent in the last four trading days after a four-day rally took it to its highest since April 1988.

The dinar, which tracks a currency basket dominated by the dollar, has tended to follow the greenback's moves on global markets.

In late New York trading on Tuesday, the dollar was down 1.22 per cent against the euro and 1.15 per cent versus the Swiss franc.

The Fed's emergency move to cut rates by three quarters of a percentage point was precipitated by a global equities market rout and wiped out the dollar's yield advantage over the euro.

The dinar, currency of the Middle East's fourth-largest oil exporter, has risen 5.87 per cent since May 19, a day before the central bank started tracking a basket of currencies. Kuwait has declined to give the composition of the basket, saying only that the dollar was its biggest component.

The central bank said the dollar's decline on global markets was driving up inflation and making some imports more expensive. Kuwait pays for more than a third of its imports in euros. (Reuters)