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Dinar falls against dollar

Kuwait's central bank let the dinar fall against the dollar on Tuesday after the US currency rebounded from all-time lows as investors pulled back from risky assets on the view that the greenback had declined too far.

The dinar will trade around a mid point of 0.27820 per dollar, compared with 0.27785, the central bank said, allowing a depreciation of 0.13%.
A 0.32% appreciation on Sunday took the Kuwait currency to its highest since June 1988. Last week, the central bank allowed the dinar to rise 0.54% against the dollar, its biggest gain since a 1.74% appreciation on July 25.

In late New York trading on Monday, investors covering short positions lifted the dollar 0.89% against the euro and 1.34% against the Canadian dollar.

The euro is still up more than 7.4% against the dollar this year.

The currency of the Middle East's fourth-largest oil exporter has risen 3.93% since May 19, a day before the central bank dropped its peg to the weakening dollar and adopted a basket of currencies.

Kuwait has declined to give the composition of the basket.

The Kuwaiti central bank says the dollar's decline is driving up inflation by making some imports more expensive. Kuwait pays for more than a third of its imports in euros.

Inflation accelerated in July to almost 5%, close to a 12-year high, according to government data.

Central Bank Governor Salem Abdul-Aziz Al-Sabah said on July 29 the basket gave the bank flexibility to track moves in global foreign exchange markets, state news agency Kuna reported.

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