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Thu 9 Oct 2008 10:34 AM

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Kuwait able to inject $15bn into market

UPDATE 1: Kuwait Investment Authority may withdraw money invested abroad, local media reports.

The Kuwait Investment Authority (KIA), the Gulf Arab state's sovereign wealth fund, is capable of injecting almost $15 billion in the local market and might withdraw money invested abroad, a newspaper said on Thursday.

KIA, which manages the Gulf Arab state's oil-generated assets, said earlier this week it was ready to pump more cash into the Arab world's second-largest bourse after having increased exposure to the market. It gave no volumes.

"The Kuwait Investment Authority confirmed its ability to pour almost $15 billion in the local market, between deposits in local banks and investments in the stock market, " Al-Qabas said in an unsourced report.

KIA has increased its available deposits in local banks to billions and might withdraw money invested in foreign markets, and it will inject fresh cash during the next few days to other investments funds, added the paper.

KIA could not immediately be reached for comment.

In addition, the government gave the green light for governmental and semi-governmental institutions including the KIA and top state oil firm Kuwait Petroleum Corp. (KPC) to move deposits to local banks, Al-Qabas said in an unsourced report.

Government deposits in banks could reach 2.4 billion dinars as the first phase, added the paper.

National Bank of Kuwait received deposits over $1.5 billion from international and US firms in the past few days through its branch in New York, the paper said without saying from where it got the information.

KIA is investing overseas and bought earlier this year into US banks Citigroup and Merrill Lynch before their share prices fell and also US credit card firm VISA.

As a measure to boost liquidity and support the Kuwait bourse, which has been declining for the past weeks in line with other Gulf stock markets, the central bank could allow local investment firms to get loans from governmental institutions, said Al-Qabas.

The central bank has been injecting funds to local lenders to improve confidence and boost liquidity, which caused the interbank interest rates to fall every day this week.

Kuwait slashed its key discount interest rate by 125 basis points on Wednesday, to 4.5 percent from 5.75 percent and the repo rate to 2.5 percent from 3.5 percent. (Reuters)

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