KUWAIT CITY, 16 December 2004 — The Central Bank of Kuwait (CBK) yesterday raised the discount rate by a quarter percentage point to 4.75 percent, the fifth such increase this year, the official KUNA news agency reported.
CBK Governor Sheikh Salem Abdul Aziz Al-Sabah said the measure follows interest rate rises on major currencies and is intended to safeguard the Kuwaiti dinar against competition from world currencies, particularly the US dollar.
“Boosting the competitiveness of the national currency... requires keeping an appropriate margin between interest rates on the dinar and those on major currencies, particularly the US dollar,” he said.
The US Federal Reserve Tuesday increased interest rates to 2.25 percent. The Gulf state’s currency is pegged to the US dollar as part of plans by the six-nation Gulf Cooperation Council (GCC) states to establish a monetary union and a single currency in 2005 and 2010 respectively.
CBK raised the discount rate in July, September and November by 0.25 percentage points each time and in August by 0.5 percentage points following similar steps by the US Federal Reserve.
