Kuwait does not face a shortage of foreign currency

According to Al-Rai daily, the Central Bank of Kuwait has confirmed that there is no foreign exchange shortage in the nation, attributing this to the fact that the majority of state income comes from oil, which is paid for in US dollars. The bank made it clear that reserves in the form of overseas assets support liquidity. The equivalent of dinars purchased by the Ministry of Finance from the Central Bank for the state budget is deposited in dollars, strengthening foreign reserves that are essential for the stability of exchange rate policy.

A key component of this mechanism is the Ministry of Finance. The Ministry guarantees an equal deposit in dollars when purchasing dinars from the Central Bank to satisfy the demands of the state’s general budget. This procedure actively supports the ongoing growth of foreign reserves in addition to facilitating the budget’s smooth execution. The exchange rate policy, which aims to preserve the relative stability of the dinar exchange rate and guarantee overall monetary stability, is implemented in large part thanks to these reserves. The statement addresses the data flow between regional banks and the Central Bank and makes it clear that banks give transaction data for tracking comparative growth and statistical purposes. Despite popular belief, this information is not used to impose.

The idea that such restrictions on foreign transfers are unnecessary is supported by the nation’s positive economic indicators. Although Kuwait’s official reserve assets saw a minor decline by the end of October, the Central Bank maintains that the exchange rate policy has been effectively implemented. This policy, which is supported by the ongoing build-up of foreign reserves, pegs the dinar to a weighted basket of foreign currencies. The Central Bank actively steers monetary policy at the interest rate level in order to support the exchange rate policy. This tactical move is in line with creating an environment that is conducive to economic expansion and at the same time strengthening the dinar’s appeal in relation to other currencies.

The bank is also dedicated to strengthening the dinar’s deposit base, which is a vital source of funding for many different areas of the country’s economy. The statement clarifies the role of banks in monitoring and reporting suspicious transactions, focusing on issues related to fighting money laundering and terrorist financing. When there is enough evidence to suspect a transfer to or from a customer, banks fulfill their obligations in accordance with Law No. 106 of 2013. This law requires financial institutions, including banks, to immediately report any transactions linked to illegal activity or raising the possibility of money laundering or terrorist financing to the Kuwait Financial Investigation Unit.

Crucially, the statement underscores that individual banks make decisions about suspected outward or inward transfers to their customers based on ongoing observation of the movement in the customer’s account. The Central Bank does not have access to this data because it is covered by Law No. 106 of 2013’s obligations on behalf of the banks. Since such accounts are outside the purview of the Central Bank’s mandate, it does not track or monitor the movement of external and internal transfers for clients. The Central Bank of Kuwait aims to strengthen trust in the country’s financial system, legal system, and careful handling of its economic policies by offering this thorough overview.

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