KUWAIT CITY (Thomson Financial) - Kuwait on Sunday pegged its dinar to a basket of international currencies after more than four years of linking the local currency to the dollar, in a bid to reduce inflationary pressures.
The oil-rich emirate had historically pegged the dinar to a basket of currencies before pegging it to the dollar in January 2003 in preparation for single currency in Gulf Cooperation Council states planned for 2010.
The value of the dinar immediately jumped from 289.14 fils to the dollar to 288.01 fils on the news. There are 1,000 fils in one Kuwaiti dinar.
Central Bank (other-otc: CHPA.PK - news - people ) governor Sheikh Salem Abdul Aziz al-Sabah said in a statement quoted by the state-run KUNA news agency that a sharp decline in the dollar's value had a negative impact on the Kuwaiti economy in the past two years.
Kuwaiti economist Hajjaj Bukhdour said the decision will help reduce 'imported inflation.'
Sheikh Salem reiterated Kuwait's commitment to plans for a single currency among the six members of the GCC.
Bukhdour said Kuwait's measure reflected difficulties faced by the alliance to achieve their target by 2010, especially after Oman had announced it will not be able to meet the target date.
tf.TFN-Europe_newsdesk@thomson.com
http://www.forbes.com/markets/feeds/afx/2007/05/20/afx3739653.html
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