KUWAIT, 12 November 2004 — The Central Bank of Kuwait raised the discount rate on the local dinar currency by a quarter of a percentage point to 4.50 percent yesterday, a day after the US Federal Reserve raised rates, a bank official said.
“The central bank raised the rate to 4.50 percent from 4.25 percent as of today (Thursday),” the central bank official told Reuters. Kuwait’s central bank usually hikes this rate shortly after the Fed does in order to preserve the competitiveness of the dinar, which has been linked to the dollar since the start of 2003. America’s central bank on Wednesday nudged US interest rates up a quarter percentage point to 2.0 percent for the fourth time this year on Wednesday.
Central Bank of Kuwait Governor Sheikh Salem Abdulaziz Al-Sabah, announcing the rate hike to state news agency KUNA in a statement, said the bank will carefully monitor interest rate developments around the globe and is ready to move again to raise the dinar rate if need be.
Yesterday’s rate move, he said, “reflects the bank’s continued concern ... to safeguard monetary stability in the national economy in a manner that provides the suitable atmosphere for real, balanced and sustainable economic growth.” The rate hike came in line with the trend of rising rates on the key currencies, especially the US dollar to which the Kuwaiti dinar is pegged “within specified margins”, Sheikh Salem added. “Keeping the dinar interest rate in line with the direction of the rates on key currencies, especially the US dollar, is an important and key support for monetary and banking stability in the national economy considering the structure of the Kuwaiti economy and its openness to the outside world,” the chief said.
