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Kuwait says currency basket to stay till FX union

KUWAIT - Kuwait would keep its dinar pegged to a basket of currencies until Gulf Arab states put a single currency in place in the world’s top oil exporting region, the central bank governor said on Sunday.

On Sunday Kuwait dropped a peg to the US dollar adopted in 2003 after the monetary union plan stalled. The moved was triggered by a spike in inflation driven by the dollar’s decline against other currencies in the past two years, official news agency KUNA quoted central bank governor Sheikh Salem Abdul-Aziz al-Sabah as saying.

“The massive decline in the dollar’s exchange rate against main currencies...has contributed to the increase in local inflation rates, and this step comes within the effort made by the central banks to curb the inflation pressure in local economy,” he said, according to KUNA.

“Until the completion of all the requirements to achieve the currency union and the launch of the Gulf currency, the central bank of Kuwait will continue to adopt the basket system.”