KUWAIT DINAR: No 1 CURRENCY OF WORLD.

 

KUWAIT DINAR: No 1 CURRENCY OF WORLD.

Today most expensive currency in the world is Kuwaiti Dinar. Before 70 to 80 years ago, the currency used in Kuwait was issue by the government of India. The Reserve Bank of India used to print Kuwait's currency that time this currency was named GULF RUPEE.it was quite similar to the Indian Rupee. The numbering in the Indian Rupees and the Gulf Rupee differed only by a letter. The specialty of the Gulf Rupee was that is not allow to use in India. This currency  used in foreign countries only. Numbers of the Gulf Rupee started.

KUWAIT DINAR: No 1 CURRENCY OF WORLD.

1:GULF RUPEE .

For Almost 200 years, from 1763 to nearly 1961, the British government control over the Persian Gulf area. Kuwait also lied in this area. Throughout the years, there were varying degrees of control over Kuwait. Here, the British Indian government saw that the economy of Kuwait was so small, so they didn't see the need to have a new currency for it. It was easier for the British Indian government to use the same currency in Kuwait that is use in India. So the initial decision of the British Indian government was to use the same Indian ruppes. But in 1947, when India came into being, the Indian government permitted Kuwait to use India Rupees. Till 1961, the  Indian Rupees is use in Kuwait. That is time when the Kuwait economy was so small because the oil Boom hadn't happened yet.

KUWAIT DINAR: No 1 CURRENCY OF WORLD.

2:KUWAIT DINAR .

Some years after India's Independence, India faced a problem of gold smuggling. Large-scale gold smuggling was happening in the Gulf area, smuggler had sells the gold in the India, and get Indian Rupee in exchange  of gold .Then they would take the Indian Rupees into the Gulf countries and  exchanged with other foreign currencies. The Indian economy had to suffer huge losses because of this. For this reason, in 1959 Indian government decided to announced  a different currency for the Gulf city, called the Gulf Rupee. This is converte with Indian Rupee in a 1:1 ratio, but the Gulf rupee would not be allowe to used in India. the smuggling would be controlle to quite an extent. After this, on 19 June 1961, Kuwait get independence from the British, and the same year in 1961, Kuwait  Dinar was announced by the new Kuwaiti government. And it's priced at RS 13+1⁄3 to KD 1.

3:FIXED EXCHANGE RATE.

 In 1975, the exchange rate of the Kuwaiti Dinar was fixed with a basket of currencies. Fixed means that the exchange rate of any country's currency with some other country's currency is fixed. That is not only fixed to a single currency, instead single currency, this is fixed with a basket of currencies. There is a basket with currencies with different percentages like 30% Dollars, 20% Pounds, and other different currencies in different proportions their total ratio is fixed to the Kuwaiti dinar. Today, most of the currencies in the world are on floating exchange rates or the other mixed exchange rate. Except for the currencies of the Gulf countries. Kuwaiti Dinar is still working on a fixed exchange rate. When you fix your currency rate then you have to maintain that peg. And to maintain that, you need a sufficient supply of foreign exchange reserves in your country. In a fixed exchange rate, the force of supply and demand needs to be counteracted by your government by using foreign exchange reserves to maintain the value of your currency.

3:KUWAIT BALANCE OF PAYMENTS.

Balance of payment means the money that coming into  the Kuwait, through foreign investments or exports is much more than the money going out of Kuwait,  through imports or investments of the locals in foreign countries. This means his foreigners are buying more goods and services from Kuwait and are investing here. So, the demand for the currency is high, thus raising its value.  The economy of Kuwait is based on oil,  price of oil is very volatile. This fluctuates rapidly,  if Kuwait starts using the floating exchange rate, then with the demand and supply of oil, then currency of Kuwait will also fluctuating rapidly like oil prize . their values will change every moment. To avoid this fluctuation Kuwait still uses the fixed exchange rate system. Kuwait does not lack foreign exchange reserves, because a lot of foreign currency has been earned by selling oil, And they have a lot of US Dollars in reserve. so he wouldn't struggle to maintain the peg.

KUWAIT DINAR: No 1 CURRENCY OF WORLD.