Kuwaiti Dinar (KWD)
Legal tender of the State of Kuwait
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What is the Kuwaiti Dinar (KWD)?
Kuwaiti Dinar is the legal tender of the State of Kuwait, an oil-rich nation in the Middle East that is surrounded by Iraq and Saudi Arabia. The dinar is divided into 1,000 “fils.”
Kuwait’s population comprises 70% expatriates. Of the country’s roughly 4.5 million residents, only a little over one million are native Kuwaitis, while close to two million are expatriates hailing from different Asian countries. Another population “quirk” of Kuwait is that in the age group from 30 to 65, men outnumber women nearly two to one.
In November 2020, rating website fxssi.com listed the Kuwaiti dinar as the most valuable currency worldwide not only because of its stability but also for the fact that it traded at a rate of 3.27 USD to 1 dinar.
Summary
- The Kuwaiti dinar is the legal tender of the State of Kuwait.
- It is considered the most valuable currency in the world, trading at around 3.27 USD to 1 dinar.
- Kuwaiti dinar was introduced in 1960, the same year that the Kuwaiti Currency Board was created.
Brief History of Kuwait and the Kuwaiti Dinar
Kuwaiti dinar was introduced in 1960, the same year that the Kuwaiti Currency Board was created. When the State of Kuwait became independent in 1961, ceasing to be a British Protectorate, the dinar replaced the Gulf rupee, which was the official currency used in Kuwait and other British Protectorates located in the Arabian Peninsula.
Kuwait became a British Protectorate in 1899 when the Ottoman Empire threatened its sovereignty. The British East India Company previously established a presence in Kuwait more than a hundred years earlier, recognizing its strategic position relative to major shipping lanes connecting key ports in Africa, India, and along the Red Sea.
Kuwait’s economy boomed in the years following World War II as it became one of the world’s premier suppliers of oil. Although it aims to diversify its economy beyond the oil industry, oil still provides 80% of the country’s tax revenues and accounts for one-third of its GDP.
As of 2020, Kuwait is the fifth richest nation worldwide in terms of per capita income, which is approximately USD 80,000.
Kuwaiti society and culture are substantially more open than those of most of its Arab neighbors, and it offers relatively greater press and civil liberties. It is largely due to Kuwait’s remarkably diverse population, with residents hailing from all four corners of the globe. Kuwait boasts the largest opera house in the Middle East and is host to several music festivals each year.
Most Kuwaitis are Sunni Muslims, but it is the only Muslim country in the Middle East that offers citizenship to Christians.
When Iraq invaded Kuwait in 1990, it stole millions of Kuwaiti dinars. Therefore, when Kuwait was liberated, it demonetized the previous issue of its banknotes and created a new issue.
Kuwaiti Banknotes and Coins
The Central Bank of Kuwait replaced the Kuwaiti Currency Board in 1969 as the monetary authority responsible for overseeing the production and regulation of the Kuwaiti dinar. The currency is extremely stable, with its value only fluctuating within a relatively small range.
While the dinar is considered the world’s most valuable currency, it is not widely traded in the foreign exchange market. Since 2007, the dinar’s been pegged to a basket of currencies that is determined by the central bank.
The dinar coins’ appearance remains essentially unchanged since their first minting in 1961. The obverse side of all Kuwaiti dinar coins features a representation of a ship, inspired by the country’s rich history as a shipbuilding center in the Persian Gulf region.
Coins are minted in denominations of 5, 10, 20, 50, and 100 fils. There was originally a 1 fil coin, but those, while still in circulation, have not been minted since 1988.
Contrary to practices of many other countries in the Middle East, Kuwait mints coins with a value of 0.02 of its currency rather than the more commonplace values of 0.025 or 0.25.
Kuwaiti dinar banknotes are printed in denominations of ¼ dinar, ½ dinar, 1 dinar, 5 dinars, 10 dinars, and 20 dinars. A notable feature is that bills are textured to make them easily identifiable by people whose vision is impaired.
The central bank produced commemorative 1-dinar polymer notes in 1993 and 2001. Both commemorative issues celebrate Kuwait’s liberation following the Iraqi invasion of 1990. However, the commemorative banknotes are merely decorative and not considered legal tender in Kuwait.
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