Kuwait is considering revaluing its dinar and is weighing the benefits of keeping its currency pegged to falling US dollar.
Asked whether Kuwait could revalue the dinar, which is trading against the dollar at the strong end of its 3.5 per cent band, Bader al-Humaidhi, the Kuwaiti finance minister, said on Saturday: "We are considering that."
Kuwait's currency has come under intense pressure from speculators betting the central bank would allow it to appreciate against the dollar to curb inflation and soak up some of the cash pouring into the oil exporter's economy.
"Inflation is one of the drivers," he said, adding the government expected annualised inflation in 2007 to match the 3.1 per cent recorded last year.
"Kuwait moved from a basket (of currencies) to the dollar. We are considering whether this is the right idea and what benefits we are from getting this," Humaidhi said.