Kuwaiti SMEs paying suppliers in dollars and euros: the dinar basket and conversion costs
Unlike its Gulf neighbours, Kuwait pegs its dinar to a basket of currencies, believed to be dominated by the dollar. A Kuwaiti importer paying suppliers in dollars and euros sees small but real rate moves, plus the conversion spreads on every payment.
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A Kuwait City furniture retailer imports from Italy, the US and China. It converts dinars to euros and dollars at its bank each time an invoice falls due. Over a year, the conversion spreads on its supplier payments equal a month of rent, and the euro's rise against the dinar added a few percent to its Italian costs.
The basket peg
Kuwait's central bank pegs the dinar to a basket of currencies of its main trade and financial partners. The weights are not published, though the dollar is generally understood to dominate. Kuwait moved back to the basket in 2007 after a period pegged to the dollar alone.
In practice the dinar moves a little against the dollar and more against the euro and others.
Supplier currencies
- US and many Asian suppliers: dollars.
- European suppliers: euros.
- Chinese suppliers: dollars, sometimes yuan.
Reduce the conversion cost
- Buy in planned amounts. Converting once a month for known payments costs less than converting at each invoice.
- Hold dollars and euros for recurring suppliers.
- Compare rates. Retail bank rates for small companies can be wide.
- Agree charges. Settle who pays transfer fees in each supplier contract.
Controls
Supplier payment fraud often starts with an email announcing new bank details. Confirm changes by phone with a known contact, and require two approvers for the first payment to new details.
Where Rivet fits
A Rivet business account accepts registered companies after verification, including Kuwaiti companies, subject to local rules. Approved companies get US account details on every plan and euro and sterling details from the Growth plan, and pay suppliers in 120+ countries at a rate shown before confirming. From Growth, payouts can require a second approver. Rivet is not a bank; regulated partner institutions hold the funds.
Questions people ask
Is the Kuwaiti dinar pegged to the dollar?
Not solely. Since 2007 it has been pegged to an undisclosed weighted basket of currencies, generally understood to be dominated by the dollar.
Does the dinar move against the dollar?
Slightly, because of the basket. It moves more against the euro and other currencies.
How can Kuwaiti SMEs reduce supplier payment costs?
Compare conversion rates, buy currency in planned amounts, hold dollars and euros for recurring suppliers, and agree who pays transfer fees.
How do I avoid supplier fraud?
Confirm any change of bank details by phone with a known contact and require two approvers for payments to new details.
Sources
Rashidatou writes Rivet's guides to how money moves between countries: the payment rails, what each one costs, and the account details a company needs to get paid in another currency. Every figure in Rashidatou's articles is traced to the scheme rulebook, the regulator or the provider's published price list, and those sources are listed at the end.
More from Rashidatou K. →This article is general information, not legal, tax or financial advice. Rules and fees change; check the sources above and the provider’s current terms before you act on them.
- kuwait
- kwd
- currency basket
- suppliers
- usd
- eur
