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4 Reasons Why Kuwaiti Dinar Is More Valuable Than US Dollar

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The US Dollar might be the most traded currency in the World, but Kuwaiti Dinar is stronger than USD because it is a major exporter of oil, good utilisation of its oil revenue, is tax-free, and by pegging its exchange rate at a high level.

  • KWD=$3.25 USD
  • KWD=£2.56 GBP
  • KWD=€2.97 EUR

The value of the Kuwaiti Dinar which was first issued in 1961, is 3.30 dollars. It is one of the most valuable currencies in Asia and the world due to its stable value, as it’s not subjected to supply and demand.

Kuwait ended the link between its Dinar and the US dollar in 2007 and connected the currency with the value of a package of currencies.

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Today, 1KWD will buy 3.27 US dollars. Its value isn’t just limited to the USD, but against other currencies globally.

The myth about the US dollar

There is a widely circulated myth that the American Dollar holds the highest monetary value among all currencies in the world, but the fact is USD isn’t the most valuable currency in the world.

In an actual sense, there are some Arab currencies that perform better than the USD in terms of value or exchange rate. KWD, Bahraini Dinar, Omani Riyal and Jordanian Dinar are some of them that are worth more than the US dollar.

In one of our previous posts, we shared with you top 40 most valuable currencies in the World against the Nigeria Naira, good enough, some of them are also doing far better when paired with the American dollar.

So…

Why Is Kuwaiti Dinar So High Than the US Dollar?

The strength of a currency is determined by the rate of international market demand. The Kuwait Dinar is in high demand because of its wealth of oil. Since oil is in such high demand, many countries need the Dinar to purchase oil which drives up the exchange rate.

Several factors give KWD an advantage over the USD, Euro, Pounds and other currencies around the World.

They include:

  • Major Exporter Of Oil.
  • Sound Utilisation Of Oil Revenue
  • Tax-Free
  • Pegging Their Exchange Rate At a High Level

Major Exporter Of Oil.

Number one, Kuwait is a major exporter of Oil. A few years ago, it is estimated that Kuwait has crude oil reserves of 104 billion barrels (15 km³), estimated to be 10% of the world’s reserves.

Sound Utilisation Of Oil Revenue

Unlike Nigeria and some African countries where sales of oil is a disaster which the politicians and public officials embezzle and mismanage, revenue from sales of oil in Kuwait is used by its to build infrastructure, develop microeconomic sectors to increase GDP.

Tax-free

Three, being a tax-free country, Kuwait’s oil industry accounts for 75% of government revenue: petroleum and petrochemicals account for 43% of GDP and 90% of export revenues while main imports remain basic necessities ranging from food products and textiles.

The above advantages enable Kuwait to peg its exchange rate at a high level as this earns them more income because their exports are much more valued than their imports.

For instance, in 2011, estimated exports stood at US$94.47 billion and imports were around US$22.41 billion.

As you can see, Kuwait didn’t get there by chance rather its leaders utilised their resources which is the country’s comparative cost advantage to boost the exchange rate of the Kuwait Dinar against the USD and other countries at the global market.

So…

Is Kuwait a rich country?

Kuwait is one of the richest countries with a GNI per capita of  $72,872 with its major revenue on oil. Its 2017 GDP stood at $271.1 billion (57th out of 196 countries ranked) with a 4.1 million population.

Kuwait is a tiny oil-rich country with a population of 4.1million people. It has other Arabian countries like Saudi Arabia, Iraq and Iran as neighbours.

Conclusion:

The most powerful currency in the world and the most valuable currency today is the Kuwaiti Dinar, it isn’t the American dollar, not the Euro, not the Swiss Franc, or the British Pound.

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