Local exchanges 'hoard' pound as currency sinks
KUWAIT: Several local money exchange companies have halted dealing in the British pound to avert major financial losses following the record crash of the sterling in the aftermath of the Brexit vote on Thursday. The pound has plunged to a three-decade low following Friday's momentous referendum outcome. The Central Bank of Kuwait (CBK) said in its daily bulletin yesterday that the pound sterling fell to KD 0.405 against the Kuwaiti dinar in the local market.
Fadel Al-Mandi, Deputy Manager, Communications and Public Relations Department of CBK, told Kuwait Times there has been a sharp fall in the pound after Britain voted to leave the European Union, and warned money exchangers against withholding the currency. "Complaints have been received about money exchangers running out of British pounds. But the fact is that many money exchange companies are hoarding the sterling and refusing to sell it because of the low rate," he said. "However, the Central Bank of Kuwait will do a field study to confirm this and we will take necessary measures to stop hoarding of the currency," he added.
Mandi pointed out that Kuwaiti citizens are jittery following the pound's sharp fall because of their huge investments in the UK. He also urged the government to issue a statement on the current situation. The pound sterling sank as low as $1.35 yesterday, a near 10 percent drop in value and its lowest rate against the dollar since September 1985, before recovering to $1.37. The fall was reportedly even greater than the drop during the 2008 global financial crisis.
"We suspended trading because there is no availability of British currency right now; selling or buying of the pound has been halted," said Montaser, a supervisor at a money exchange in Kuwait City. "Maybe by tomorrow, when the market stabilizes, we will resume trading in sterling again," he told Kuwait Times. "The pound has dropped considerably and we cannot blame dealers for holding their money, because everyone knows they bought the currency at a very high price. We really hope by tomorrow that everything will be okay," he added.
But another exchange company in Kuwait City was dealing in the pound yesterday. "We are buying and selling British currency. How much you need, we have it. We are aware of the fact that some companies have halted trading in the pound. But we are in the money exchange business, and whatever happens, we won't stop. Ironically, no one is asking for the pound right now," said Mustafa, the exchange company manger. "A week ago, 1,000 British pounds traded at KD 460. Now it is KD 410," he added.
© Kuwait Times 2016
