NID shopping in Kuwait City

[RogerTHughes]

Many exchange vendors are out of NID. Bought some at 1250 to $1. Asked for lower denominations, but vendor had very little except 25K notes. Got some 5K's and 1K's (all were used bills) Went to jeweler known to be reliable source of NID. He, too, was out though he said given some time he could get some. At Kuwait airport exchange bank they seems to have plenty NID but at 1200 to $1. My opinion is that CBI is doing great job of soaking up NID and preventing its flow out of country (illegally) So speculation is slowing and with stable NID could slow it to snails pace. Then the CBI can better control NID's future. One of the keys to RV seems to be stability and control. Of course the other major key is foreign investment and foreign contracts. They can be assigned a $ value and thus justify controlled increase in NJD value. Opinions?

[Stout Hearted Man]

Iraq has over 60% inflation plus most common items are imported so if they really care about their citizens the Iraqi government should revalue their currency quickly...OR they can continue their slow revaluation and let their people suffer for the next three years.

[PegBundy]

good comment stout...add to that the increasing cost of domestic goods that are no longer subsidized. the lack of rising wages offer little purchase power

[harpua]

Central bank may counter dinar speculation
Published Date: March 29, 2007

KUWAIT/DUBAI: Kuwait's central bank said yesterday that it may take unspecified measures to curb speculation in its dinar, firing a warning shot as speculators buy the currency in the hope that the oil producer may revalue. "Having huge inflows of capital is increasing the burden on us," Nabeel Al-Mannae, deputy governor of the Kuwait central bank, said in a telephone interview with Reuters yesterday. "We will make sure they won't make money on our currency."

Investors had been buying dinar forwards after Kuwaiti officials said they may revalue the unit, which, like other Gulf Arab currencies, is pegged to the dollar. The central bank may "take necessary measures so that there will be no benefit from such speculative behaviour", Mannae said in the earlier statement. The bank is "unsatisfied with the increase in the volume of dinar purchases that do not have underlying commercial foundation and which are indicative of accumulation of speculative long dinar position", Mannae said in the statement.

In the interview, Mannae declined to be more specific about the possible measures, though he ruled out capital controls. "We say absolutely we will not use capital controls," he said. The central bank could act as early as Sunday, he said. The central bank is closed today and tomorrow for the weekend, and again on Saturday for a public holiday. Kuwait allowed its currency to appreciate 1 per cent within a 3.5 per cent trading band against the dollar in May, citing rising euro and other non-dollar import costs.

The euro has appreciated almost 13 per cent against the dollar since Jan 1, 2006, helping to fuel inflation in Gulf Arab oil producers. Crude oil is priced in dollars. HSBC estimated Kuwait's 2006 inflation at 3 per cent, its second highest annual rate in at least the past five years. The dinar fell yesterday to as low as 0.28970 per dollar on the central bank statement, its lowest since May.

"It's pretty clear cut - there have been rumours of a dinar revaluation and a number of people have been placing trades in forward markets based on this so the central bank is reacting to that," said Shahin Vallee, a strategist at BNP Paribas in London. "They could sell dinar forwards aggressively." Kuwait was the top candidate to revalue, according to several analysts in a Reuters poll earlier this month, with a change likely to be 5 per cent.

Investors betting that Kuwait and the United Arab Emirates, would revalue separately from their Gulf peers pushed the UAE dirham to an 11-month high and the dinar to a 10-week high in February. Dorothee Gasser, an economist at ING Bank in London, said US funds were among buyers of the dinar. "You can't blame the funds as Kuwait had mulled revaluation in December and they did revalue in May last year," Gasser said. Speculation about a region-wide revaluation reached fever pitch earlier this year after the UAE, the Arab world's second largest economy, said Gulf states could decide at a meeting in Saudi Arabia next week whether to keep or change their exchange rate regime.

Gasser and Standard Chartered, in a research report this month, said that Kuwait was likely to revalue in the second quarter on expectations that the dollar would depreciate against the euro. Standard Chartered said there could be "either a widening of the band or a shift to a more flexible exchange rate system, such as targeting a trade-weighted level for the KWD instead". - Reuters

http://www.kuwaittimes.net/read_news.php?newsid=MTQxMDMyNzY4 (http://www.kuwaittimes.net/read_news.php?newsid=MTQxMDMyNzY4)

[eatrocks]

Central bank may counter dinar speculation
Published Date: March 29, 2007

KUWAIT/DUBAI: Kuwait's central bank said yesterday that it may take unspecified measures to curb speculation in its dinar, firing a warning shot as speculators buy the currency in the hope that the oil producer may revalue. "Having huge inflows of capital is increasing the burden on us," Nabeel Al-Mannae, deputy governor of the Kuwait central bank, said in a telephone interview with Reuters yesterday. "We will make sure they won't make money on our currency."

Investors had been buying dinar forwards after Kuwaiti officials said they may revalue the unit, which, like other Gulf Arab currencies, is pegged to the dollar. The central bank may "take necessary measures so that there will be no benefit from such speculative behaviour", Mannae said in the earlier statement. The bank is "unsatisfied with the increase in the volume of dinar purchases that do not have underlying commercial foundation and which are indicative of accumulation of speculative long dinar position", Mannae said in the statement.

In the interview, Mannae declined to be more specific about the possible measures, though he ruled out capital controls. "We say absolutely we will not use capital controls," he said. The central bank could act as early as Sunday, he said. The central bank is closed today and tomorrow for the weekend, and again on Saturday for a public holiday. Kuwait allowed its currency to appreciate 1 per cent within a 3.5 per cent trading band against the dollar in May, citing rising euro and other non-dollar import costs.

The euro has appreciated almost 13 per cent against the dollar since Jan 1, 2006, helping to fuel inflation in Gulf Arab oil producers. Crude oil is priced in dollars. HSBC estimated Kuwait's 2006 inflation at 3 per cent, its second highest annual rate in at least the past five years. The dinar fell yesterday to as low as 0.28970 per dollar on the central bank statement, its lowest since May.

"It's pretty clear cut - there have been rumours of a dinar revaluation and a number of people have been placing trades in forward markets based on this so the central bank is reacting to that," said Shahin Vallee, a strategist at BNP Paribas in London. "They could sell dinar forwards aggressively." Kuwait was the top candidate to revalue, according to several analysts in a Reuters poll earlier this month, with a change likely to be 5 per cent.

Investors betting that Kuwait and the United Arab Emirates, would revalue separately from their Gulf peers pushed the UAE dirham to an 11-month high and the dinar to a 10-week high in February. Dorothee Gasser, an economist at ING Bank in London, said US funds were among buyers of the dinar. "You can't blame the funds as Kuwait had mulled revaluation in December and they did revalue in May last year," Gasser said. Speculation about a region-wide revaluation reached fever pitch earlier this year after the UAE, the Arab world's second largest economy, said Gulf states could decide at a meeting in Saudi Arabia next week whether to keep or change their exchange rate regime.

Gasser and Standard Chartered, in a research report this month, said that Kuwait was likely to revalue in the second quarter on expectations that the dollar would depreciate against the euro. Standard Chartered said there could be "either a widening of the band or a shift to a more flexible exchange rate system, such as targeting a trade-weighted level for the KWD instead". - Reuters

http://www.kuwaittimes.net/read_news.php?newsid=MTQxMDMyNzY4 (http://www.kuwaittimes.net/read_news.php?newsid=MTQxMDMyNzY4)


i reaally don't know what to make of this. who has the money to buy and speculate if it will Rv a little
1 kuwati dinar is about 3.50 US



unless this article is 17 years old

[carlos]

I agree, it's weird. Makes sense in the light of the news of the recent big purchases we've been reading about in different threads! Like one for 25 million US that went to buy dinars! And I always suspected that the sales of dinar would hurt their current economy because this represents money that they will theoretically have to pay, one way or another. Or at least they feel that they will have to pay.
The part that REALLY got my attention was when it was said that "We will make sure that these do not profit!'
Makes ya' wonder...huh?
carlos