KHAFJI, 30 March 2003 — The value of the Kuwaiti dinar has drastically declined in the market in Khafji and other border areas since the start of the war on Iraq.
Although local banks are still paying the official exchange rate of SR12.50 for one Kuwaiti dinar, stores, petrol stations and real estate agents are refusing to accept the Kuwaiti dinar at its official rates and offering between SR5 and SR7.
Some privately-owned bureaux-de-change are also offering a much lower rate.
“It is sheer blackmail but we can do nothing about it,” said a frustrated Mishal Al-Jarrah, a Kuwaiti citizen who has been staying in Khafji for two weeks.
He said before the war all Khafji shops and supermarkets were accepting the dinar at the official rate but now they were offering absurdly low rates.
Traditionally, all GCC currencies are accepted in the Eastern Province at their official rate.
The new trend has led to long queues at banks, with Kuwaitis lining up to exchange their dinars.
In the Gulf War of 1991, the Kuwaiti dinar declined in value to the point where it was impossible to exchange.
Ahmad Al-Abki, a local journalist in Khafji, told Arab News that paying lower rates was illegal but said that the market was nervous about the strength of the Kuwaiti dinar due to the ongoing war in Iraq. Kuwait has been hit by several Iraqi missiles.
He said another reason for the lower exchange rate in the market was fear of large-scale exodus of Kuwaitis to Saudi Arabia. “Market fears are that such an exodus will devalue the Kuwaiti currency,” he said.
In Dammam and Alkhobar there is no such trend, though supermarkets and grocery stores say that they prefer to take Saudi currency.
“We suggest GCC customers exchange their currencies at banks and other money changers into Saudi riyals. This will be beneficial for them and convenient for us,” said Abdullah Al-Eissa, the manager of a supermarket chain in the Eastern Province.
After today’s missile attack on Kuwait, there has been a slight increase in the number of Kuwaitis crossing over the border, but officials say the numbers are not alarming and could not be described as an exodus. “It is still very much within the limits,” a border official told Arab News.
