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Wed 9 Sep 2009 03:08 PM

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Kuwait has no plans to return to dollar peg

No need to change dinar's exchange rate policy from basket of currencies - minister.

Kuwait has no plans to return to dollar peg
KUWAIT CASH: Kuwait has no plan to re-link its dinar to the US dollar. (AFP/Getty Images)

Kuwait has no plan at the moment to re-link its dinar to the US dollar after two years of pegging to a basket of currencies, the finance minister said in comments published on Wednesday.

"At this stage, we don't see a need to change the dinar's exchange rate policy based on pegging to a balanced basket of currencies," Mustafa al-Shamali said in a reply to a parliamentary question published in Al-Rai daily.

The minister said the policy provides flexibility to the central bank in designing and executing its monetary policy.

In May 2007, Kuwait ended almost five years of the dinar's link to the dollar and reverted to a basket of currencies in a bid to fight inflation that soared to record high levels before starting to decline late last year.

The change to the dollar peg in 2003 was taken to facilitate the launch of the Gulf monetary union and single currency, which many observers now believe will be too difficult to launch on time in 2010.

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