Kuwaiti Dinar (KWD)
The official currency of the country of Kuwait
Updated:
June 12, 2023The Kuwaiti dinar (KWD) is the official currency of the country of Kuwait, which on the north and west borders Iraq, the Persian Gulf on the east, and the Kingdom of Saudi Arabia on the south.
Unlike other currencies, such as the United States dollar (USD), recognized as the internationalized currency and used in many countries worldwide, the Kuwaiti dinar is only used in Kuwait.
The Kuwaiti dinar is the most valuable currency in the world, with 1 KWD = 3.26 USD, mainly due to the country's economic stability and abundant oil reserves.
Kuwait is a major oil supplier in global markets; therefore, a significant proportion of its government's revenue comes from the oil supply. The high oil demand creates a high demand for Kuwait's currency. In addition, the Kuwaiti dinar is also quite stable and a great diversifier for currency portfolios.
Brief History of Kuwait and the Kuwaiti Dinar
Kuwait is the only country that uses the Kuwaiti dinar. Still, there are other variations of the "dinar" as currency in the Middle East, like Jordanian, Algerian, Bahraini, and a few others.
Kuwait is not the only country that uses the "dinar" as currency; it is used in other countries in the Middle East, like Jordan, Algeria, and Bahrain, among a few others. The word dinar comes from the Roman "denarius," a silver coin used by Romans when trading.
The Roman Empire was quite strong in influencing Islamic caliphates after Islam arose from the Arabian Peninsula. For example, Abd Al-Malik Ibn Marwan Ibn Al-Hakam, the fifth caliph of the Umayyad dynasty, issued a coin called the gold dinar, which gained widespread use.
Between 1959 and 1966, the British protectorates of the Arabian Peninsula around the Persian Gulf recognized the Gulf rupee as the official currency. These protectorates comprise modern-day Bahrain, Oman, Qatar, the United Arab Emirates, and Kuwait.
After the fall of the Ottoman Empire, Kuwait was under British colonial rule. So, they introduced the Indian rupee as the currency to be used. Then, in 1959, the replacement came with the Gulf rupee, pegged to the Indian rupee. Then, the Gulf rupee was pegged to the British pound.
In 1961, Kuwait took independence from Great Britain, and hence the Kuwaiti Currency Board created the Kuwaiti dinar to become the new unit of money for the country. The dinar and rupee were used simultaneously until India devalued the Gulf rupee, which diminished its use in the Persian Gulf.
Iraq invaded and occupied Kuwait for roughly seven months in 1990, during which the occupation forces stole several Kuwaiti dinar banknotes. They announced the Iraqi dinar as the new official currency at that event.
When Kuwait regained its independence from Iraq in 1961, the Kuwaiti dinar also returned.
However, a limitation of pegging currency is that the unit is only as strong as the one it is pegged to. Between the late 1970s and early 1980s, the exchange rate of the British pound dropped significantly.
The Kuwaiti Currency Board expected this fall; thus, they quickly switched to a peg on a basket of currencies rather than just one. This switch allowed them to be less vulnerable to fluctuations in the exchange rate of a single currency.
This pegged system continued until 2003, when Kuwait shifted its currency peg to the U.S. dollar. At that time, roughly three dinars were equivalent to one U.S. dollar.
Nonetheless, the country transitioned back to a peg on a basket of currencies in 2007, before the United States financial crisis occurred, and that system is still in place.
Kuwaiti banknotes
From 1961 until today, there were six series of banknotes in circulation that the Kuwaiti Currency Board issued. The banknotes symbolize the country's independence and cultural heritage over the years.
Two commemorative sets were also released, first in 1993 for the second anniversary and another in 2001 for the 10th anniversary of their freedom from Iraq.
The Central Bank of Kuwait is the only authoritative body to issue Kuwaiti currency. The currency is divided into one thousand Fils. Banknotes are printed in the following values: a quarter dinar, a half dinar, one dinar, five dinars, ten dinars, and twenty dinars.
The development of the new banknotes occurred innovatively. Thus, it exhibits excellent quality, security measures, and aesthetic appeal and showcases many of Kuwait's accomplishments, the uplifting spirit of its citizens, and other national elements.
The designs on various banknotes integrate several key icons of the country's history and cultural elements. These symbols include buildings, like the Palace of Justice, an image of the ruler at the time, a dhow sailing ship, and a falcon.
Timeline for Six Series of Kuwaiti dinar Banknotes
The timeline is as follows:
a. 1st Series: 1961
The first Kuwaiti dinar banknotes were released in 1961, which was after the country gained independence from Great Britain under the rule of His Highness Sheikh Abdullah Al-Salim Al-Sabah. Following independence, they replaced the use of the rupee brought in by the Britains.
The declaration of the Kuwaiti Currency Law came with the Amiri Decree No. (41) of 1960. That is when the Kuwaiti dinar became the official currency and was paralleled with the creation of the Kuwaiti Currency Board.
This issuance expired in February 1982 and could no longer be exchanged in February 1992.
b. 2nd Series: 1970
In 1970, the Kuwaiti Currency Board was dismantled and replaced by the Central Bank of Kuwait (CBK). The Central Bank then became responsible for several economic tasks, including issuing the currency.
This issue came under the rule of His Highness Sheikh Sabah Al-Salim Al-Sabah, and thus he was recognized with his face portrayed on one side of each banknote.
The CBK issued the quarter, half, and ten dinars notes in November 1970, while the one- and five-dinars notes were issued in April 1971.
The second issuance expired in February 1982 and could no longer be exchanged in February 1992.
c. 3rd Series: 1980
While His Highness Sheikh Jaber Al-Ahmad Al-Jaber Al-Sabah was in power, the CBK released the third issue. The quarter, half, one, five-and ten-dinar notes were released in February 1980, but the twenty dinars notes came later in February 1986.
When the Iraqi forces occupied Kuwait in 1990, several banknotes were stolen.
The withdrawal of the third issue came in March of 1991. The right to exchange those notes came to an end in September 1991.
d. 4th Series: 1991
The fourth series was released shortly after the country was freed from Iraqi control, allowing for a quick economic recovery.
These banknotes were withdrawn in August 1994, and the right to exchange them expired in August 2004.
e. 5th Series: 1994
The fifth issue was circulated in April 1994 and incorporated new security features that the printing industry introduced. This issue was no longer legal tender beyond October 2015.
f. 6th Series: 2014
Released in June 2014, this series's banknote design portrays the country's heritage, history, economy, and aspirations. The banknotes also embed high-security measures in printing.
the Sixth kuwaiti dinar Issue
There is a subtle image of the Kuwaiti flag in the background of every banknote to represent national identity. In addition, the images on each side of a banknote are varied to illustrate Kuwait's economic, industrial, and cultural monuments and/or the aspects of marine or desert life.
As per the CBK's booklet on the design, elegance, and security of the sixth issue (published in English and Arabic), the descriptions of the designs are as follows:
- The 20 dinar note features Seif Palace on the front. The back shows a dhow known as Al Boom, the most popular traditional dhow, and a design related to pearl diving. Before oil, pearl diving helped Kuwaitis earn an income.
- The 10 dinar note's front side features the National Assembly Building, while the back has a falcon and camel to represent their desert life.
- The 5 dinar note has an image of the new Central Bank building as a symbol of economic stability. Meanwhile, on the back is a depiction of an oil refinery, representing their prosperity.
- The 1 dinar note highlights the Grand Mosque on the front and the island of Failaka on the back.
- The half dinar note displays the Kuwait Towers on the front, one of the most familiar buildings. The endangered hawksbill sea turtle and silver pomfret are on the back, symbolizing marine life. The silver pomfret is the most popular fish.
- The quarter dinar note exhibits the Liberation Tower, signifying independence, on the front side. A traditional wooden door, a plaster carving, and the first-ever local coin make up the design of the backside.
This issue contains the most advanced security features in printing history. These features rely on touching, tilting, and lifting the notes. For instance, some threads change color when the note is tilted.
Facing it to the light reveals a shift in color and design, with an image, the note's value, and a falcon watermark.
The Central Bank prints note values in a larger font and with unique raised ink on the edge of the surface to aid the visually impaired in society. This sixth issue is the one that is currently utilized today.
Kuwaiti Coins
Kuwaiti coins were introduced in 1961, and their design remains the same today. The "head" of the coin portrays a boom dhow and the year of minting written in Arabic formatted for both the Islamic and common calendar.
The "tails" side has the coin's value displayed in Arabic within a circle with "KUWAIT" written in Arabic and English.
The coins contain values of 1, 5, 10, 20, 50, and 100 fils. Kuwait is unique compared to many other currencies in the Middle East, as it has a coin worth 0.02 dinars instead of 0.025 or 0.25.
Similar to commemorative banknotes, the Central Bank of Kuwait also issued several sets of commemorative coins over the years. Some were silver, while others were gold.
Those sets were released in celebration of various dates that hold significance for Kuwait, such as the anniversary of the liberation and national day of the State of Kuwait in different years, the anniversary of the Kuwaiti currency issuance, and others related to the economy and politics.
Key Takeaways
- The Kuwaiti dinar (KWD) is the official currency of Kuwait and is recognized as the most valuable currency due to exceptionally high oil revenues.
- 1 KWD is equal to roughly 3.26 USD.
- The KWD is roughly stable and pegged to a basket of currencies.
- From 1961 until today, there have been six issues of the banknotes released, with designs illustrating the cultural and economic history and prosperity.
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