Explore the Foreign Currency Exchange World24.10.2022
Money makes the world go round. It also makes interesting and insightful round table discussions on its values, purchasing power, exchanges, and whatnot, both among regular citizens and government policymakers. The currency exchange rate is a critical piece; especially in a country like Kuwait, where close to 70% of the population are from different parts of the world.
The variety of business and personal activities in Kuwait makes it an ideal place for international businesses and tourism. The Kuwaiti Dinar as a strong and stable currency also makes for great opportunities in the Forex Market. However, to make the most of these, one must have the basics of foreign currency exchange in place and be up-to-date with everything related to the currency exchange rates. So, whether you’ve just heard of (and wondered) about the foreign currency exchange from the news or through your expat friend, or you are an expat figuring out the currency exchange rate in Kuwait — we’ve got you covered.
What is the foreign currency exchange?
Literally speaking, “Foreign Currency Exchange” simply means the conversion of one national currency to another one. However, given the fact that the value of each currency keeps floating (with respect to each other) because of various market forces and political forces, the exchange rate of the currencies always keeps fluctuating.
It’s noteworthy that the currency exchange rate is helpful to determine a nation’s economic health. Various nations and international forums also harness it to reflect their alliance and adversity with each other.
The United States Dollar, the British Pound, the Euro, the Australian Dollar, and the Japanese Yen see the highest volume of foreign currency exchange. The USD has long remained the most traded currency. And the Kuwait Dinar (KWD or KD) has regularly been hailed as the strongest currency in the world.
What factors affect foreign currency exchange?
As mentioned earlier, there are various external and internal factors acting simultaneously that influence the currency exchange rate of a nation with another. The world economy has become such a dense network that it’s not possible to account for every single one of them that affects a foreign currency exchange. However, in general, it’s all based on the supply and demand of the currency in the global market.
So, let’s look at a few major factors from a bird’s eye view:
- Inflation Rates - It is the purchasing power of a currency relative to the other currencies. A lower inflation rate means an appreciation in the value of the currency and vice-versa.
- Interest Rates - It is regulated by the central bank of a country, to control the inflation rate and exchange rate. Keeping it high for too long can mean a hike in inflation and a dip in currency value.
- Government Debt - It’s the national debt or the public debt owed by the central government. A country with significant debt tends not to acquire foreign capital, which can lead to inflation.
- Current Account Deficit - Account deficit is related to the balance of trade of a country with trading partners. If a country constantly imports more than it exports, it risks depreciation.
- Terms of Trade - Related to the trade deficit, terms of trade is the ratio of export prices to import prices. Higher the ratio, the better the exchange rate.
- Political Stability - A country with a stable government that attracts foreign investment leads to an appreciation in the value of its domestic currency.
In addition to these, any unforeseen or well-speculated event that may make cause a fall or rise in the demand of the currency can fluctuate the currency exchange rate.
Currency exchange rates today
The is always changing with respect to each other.
Find the latest currency exchange rate for KD for major foreign currency exchange here.
Currencies with the highest exchange rate
The US Dollar is considered the most valuable currency in the world because over 80% of global trading takes place in it. Still, when it comes to the currency exchange rate, there are currencies that are worth more than the USD - including the Kuwaiti Dinar.
Below is the list of the top ten currencies with the highest foreign currency exchange rate with respect to the USD in 2022.
|Rank||Currency||Code||Value in USD|
|1||Kuwaiti Dinar||KWD||USD 3.31|
|2||Bahraini Dinar||BHD||USD 2.66|
|3||Omani Rial||OMR||USD 2.60|
|4||Jordanian Dollar||JOD||USD 1.41|
|5||British Pound Sterling||GBP||USD 1.38|
|6||Cayman Islands Dollar||KYD||USD 1.22|
|7||European Euro||EUR||USD 1.19|
|8||Swiss Franc||CHF||USD 1.08|
It’s noteworthy how Kuwaiti Dinar ranks on top as the currency with the highest exchange rate.
Why is Kuwait currency so high?
As we saw earlier that the value of a currency is dependent on various factors including how the government of the country regulates the market. Fortunately, Kuwait has an oil-based economy, which supports it having high Terms of Trade. Interestingly, the KD does not rely on a peg; rather it is a free-floating currency. Also, Kuwait offers tax-free income to individuals – thereby attracting expats from across the world and increasing the KD’s foreign currency exchange demand.
In addition, over the years, the government of Kuwait has worked progressively to amass significant sovereign wealth funds. Being resource-rich and managing its finance policy smartly, has enabled the Kuwaiti Dinar to have a consistently high currency exchange rate.
Where can you get the best exchange rate?
Any foreign currency can be exchanged at certain rates with charges via various offline and online avenues:
- Forex Market (short for Foreign Exchange Market)
- Local banks and credit unions
- International banks with overseas ATMs (especially in the airports)
- Various mobile apps
- Online bureaus or currency converters
Remittance in Kuwait
Remittance is defined as a non-commercial money transfer by a foreign worker, or a citizen with relatives in other nation, to their families or wards in their home country or homeland.
There are different laws concerning the remittance of expats in different countries. There are various banks in Kuwait that offer remittance services across the world at competitive rates.
Not only does Kuwait have the strongest currency in the world, but it also offers the benefit of zero-tax income for all including the expats. With this understanding of currency exchange rates and foreign currency exchange, it’d make sense to open a bank account in Kuwait. Because earning money is not enough; allocating it wisely and investing it smartly goes a long way.