Regulatory Alerts2008-06-26
Instructions Concerning Banks Dealing in Foreign Exchange Transactions
The Central Bank of Kuwait issued these instructions to regulate foreign exchange operations for local banks, establishing trading limits, settlement procedures, and risk management requirements. The directives permit institutions to trade Kuwaiti Dinars against foreign currencies on a two-working-day value basis, conduct US dollar/KD swap transactions with a one-year maturity, and mandate same-day coverage of customer USD purchases unless alternative funding is utilized. Effective October 2006, the regulator lifted restrictive 1990s controls, enabling local banks to resume interbank deposits, outright and forward FX transactions, and hedging instruments while maintaining established trading limits and board-approved policies.
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