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24 May 2024

Kuwait allows dinar to fall as dollar recovers

By Agencies


Kuwait let the dinar fall against the dollar for the first time in almost a week, off a record high as the US currency recovered some losses, holding above its lowest level against the yen in almost 13 years.

The dinar, the currency of the only Gulf Arab oil producer that does not peg to the dollar, will trade 0.11 per cent lower on Tuesday around a mid-point of 0.26630, compared with 0.26600 the day before, central bank data showed.

That lowers its cumulative gain against the dollar since dropping its peg on May 19 to 8.58 per cent from 8.7 per cent on Monday.

Gulf Arab states are under pressure to revalue their currencies as the dollar plunges on concern about the United States economy.

The dollar held above its lowest level against the yen in nearly 13 years and a record low versus the euro on Tuesday, but was seen susceptible to more declines on worries about the US financial system.

The dollar plunged on Monday after the Federal Reserve took the emergency step of cutting its discount rate on Sunday and opened up discount window lending to major investment banks, a tool not used since the Great Depression.

The steps, which accompanied JPMorgan Chase Co's decision to buy stricken rival Bear Stearns at a rock-bottom price of $2 a share, was seen as highlighting the depths of the damage caused by the tumult in credit markets and sparked a dollar sell-off. (Reuters)