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Kuwait panel urges currency revaluation
A Kuwait parliament committee urged the government to allow the dinar currency to reflect the real value of the U.S. dollar, which is at record lows against the euro, state news agency KUNA reported on Wednesday.
"On the foreign exchange market the government is (asked) to review the exchange rate of the U.S. dollar in the light of the actual prices on the market...," KUNA quoted budget committee recommendations as saying.
Kuwait abandoned its peg to the dollar in May, allowing the currency of the world's seventh largest oil exporter to appreciate 0.37 %.
The central bank said at the time it wanted to contain the impact of the dollar's slide on imports, which were driving up inflation.
Analysts including those at Deutsche Bank and Standard Chartered expect Kuwait to move again this year especially if the dollar's slide continues.
The dollar slipped for a second session on Wednesday, hitting a fresh low against the euro, a 26-year low against sterling and a one-month trough against the yen.
The parliamentary committee made the comments as part of a package of recommendations which parliament adopted as it approved the 2007/08 state budget.
Standard Chartered said in June Kuwait was likely to let its dinar rise a further 0.35 % against the dollar in 2007.
Kuwait had pegged its dinar to a currency basket until it adopted a dollar peg in 2003 to prepare for regional monetary union by 2010.
The basket used by Kuwait until then was 85 % in dollars, 10 % in euros and 5 % in sterling, Standard Chartered's regional head of research Steve Brice said in a note n June 28.
The central bank has not disclosed the composition of the new basket, saying only that it consisted of the currencies Kuwait uses for imports and investment.
The timetable for monetary union has been in doubt since Oman said last year it would not meet the deadline.
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