Kuwaiti money supply accelerates 23% in May

Growth in Kuwaiti money supply accelerated to almost 23 per cent in May from 20.6 per cent a month earlier led by investments in savings deposits as the Gulf state contends with record inflation. M3, the broadest measure of money circulating in the economy, hit 21.39 billion dinars (Dh296.45bn) on May 31 compared with KWD17.40bn a year earlier, the country's central bank said in a statement on its website yesterday. Inflation in Kuwait, the only Gulf oil producer that does not peg its currency to the dollar, jumped to a record 10.14 per cent in February. Money supply growth is an indicator of future inflation. May's rise in money supply was the fastest since February as quasi-money – which includes savings deposits and time deposits in dinars, as well as foreign currency deposits – grew 21.3 per cent to KWD16.07bn. Currency in circulation climbed 10.8 per cent at KWD727.3 million, the central bank said. Narrow money, or M1, rose 28.2 per cent to KWD5.32bn. Kuwait severed its link to the US dollar in May 2007, saying the weakening greenback was stoking inflation by making some imports more expensive. The move, however has had little impact on inflation in the country. The central bank has been urging lenders to slow down credit growth, tightening bank curbs on consumer lending in late March to try to rein in inflation. Private sector lending rose by 29.65 per cent to KWD23.86bn in May, the data showed.