Kuwait money-supply growth jumps 23% in May

EXCESS LIQUIDITY: Growth in money supply in Kuwait shot up 23 percent in May, led by investments in savings deposits. (Getty Images)

Growth in Kuwaiti money supply accelerated to almost 23 percent in May from 20.6 percent a month earlier led by investments in savings deposits as the Gulf state contends with record inflation.

M3, the broadest measure of money circulating in the economy, hit 21.39 billion dinars ($80.78 billion) on May 31 compared with 17.40 billion dinars a year earlier, the central bank said in a statement on its website on Sunday.

Inflation in Kuwait, the only Gulf oil producer that does not peg its currency to the dollar, jumped to a record 10.14 percent in February. Money supply growth is an indicator of future inflation.

May's rise in money supply was the fastest since February as quasi-money - which includes savings deposits and time deposits in dinars, as well as foreign currency deposits - grew 21.3 percent to 16.07 billion dinars.

Currency in circulation climbed 10.8 percent at 727.3 million dinars, the central bank said.

Narrow money, or M1, rose 28.2 percent to 5.32 billion dinars.

Kuwait severed its link to the U.S. dollar in May 2007, saying the weakening greenback was stoking inflation by making some imports more expensive.

The central bank has been urging lenders to slow down credit growth, tightening bank curbs on consumer lending in late March to try to rein in inflation.

Private sector lending rose by 29.65 percent to 23.86 billion dinars in May, the data showed.

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