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Sun 29 Jul 2007 10:10 AM

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Kuwaiti dinar depreciates against dollar

Kuwait allows dinar to depreciate against US currency for the second straight working day, a drop of 0.05%.

Kuwait allowed the dinar to depreciate against the US dollar for the second straight working day, letting it drop 0.05% on Sunday and suggesting it is tracking global currency moves more closely.

The dinar will trade around a mid-point of 0.28245 per dollar, the central bank said, from 0.28230 on Thursday, when the country allowed the dinar to depreciate 0.11%.

The currency of Kuwait, the Middle East's fourth-largest oil exporter, surged to an 18-year high on Wednesday as the US dollar tumbled to record lows against the euro.

"The market assumed last week that the currency basket had been activated, and this second small-scale adjustment confirms it," said Simon Williams, Middle East economist at HSBC bank in Dubai.

"We expect to see the central bank adjust the exchange rate on a regular basis to reflect changes in the value of the dollar against the world's major currencies, particularly against the euro," Williams said.

The US dollar rebounded sharply on Friday as trouble in the US credit markets led investors to repatriate funds from overseas. The dollar last traded at 1.3634 against the euro.

The dinar has now risen 2.37% from its rate on May 19, the day before the central bank adopted a basket of currencies, unshackling it from the tumbling dollar to contain the impact of rising import prices on inflation.

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