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Tue 30 Oct 2007 11:14 AM

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Dinar rises against dollar for third time in a week

Kuwait lets dinar appreciate after dollar fell to new lows on bets US will cut rates.

Kuwait let the dinar rise for the third time in a week on Tuesday after the dollar fell to record lows against the euro and a basket of currencies on bets the US Federal Reserve will reduce interest rates this week.

The dinar will trade around a mid point of 0.27710 per dollar, compared with 0.27720, the central bank said, allowing an appreciation of 0.04%.

Kuwait's currency has risen 0.4% since October 23 and is at its highest since June 1988.

Overall sentiment remained bearish on the dollar, with many analysts convinced that more rate cuts are needed to avert further deterioration in the housing sector and prevent a US recession.

In late New York trading on Monday, the dollar was down 0.19% against the euro and 0.49% against the pound. The US currency rose 0.39% against the yen.

The currency of the Middle East's fourth-largest oil exporter has risen 4.35% 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 central bank says the dollar's decline on global markets is driving up inflation and making some imports more expensive. Kuwait pays for more than a third of its imports in euros.

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