# What Is Kuwaiti Currency? KWD (Kuwaiti Dinar) Definition and History

![Kuwaiti Dinar (KWD): The national currency of the State of Kuwait.](https://www.investopedia.com/thmb/6QwvhSyVNHMZI5UgDurc-1n1qSw=/1500x0/filters:no_upscale():max_bytes(150000):strip_icc()/kwd.asp-FINAL-1-5b7f5076e04d422b873ee69411adb023.png)

*— Joules Garcia / Investopedia*

## What Is the KWD (Kuwaiti Dinar)?

The Kuwaiti dinar (KWD) is the national currency of the State of Kuwait, which is located in the Middle East on the Arabian Peninsula right on the Persian Gulf. The dinar name derives from the Roman denarius. The KWD, which is the dinar’s [forex](https://www.investopedia.com/best-brokers-for-forex-trading-4587882) acronym, subdivides into 1000 fils, which is a coin used in many Arab countries.

Kuwait’s economy is heavily reliant on oil, making it one of the wealthiest nations in the world as measured by gross domestic product (GDP) per capita.

### Key Takeaways

*   The Kuwaiti dinar (KWD) is the currency of the State of Kuwait, and as of 2024 is one of the most valuable currencies on Earth.
*   The currency fluctuates in a relatively small range and is pegged to an undisclosed basket of currencies.
*   The economy of Kuwait is heavily reliant on oil, making it one of the wealthiest nations in the world.
*   Since its official release in 1961, the KWD has gone through six different versions.
*   As of July 2024, one Kuwaiti dinar is equal to approximately $3.27 U.S. dollars.

## Understanding the KWD (Kuwaiti Dinar)

The introduction of the Kuwaiti dinar (KWD) in 1961 was a replacement for the Gulf rupee. The Gulf rupee was a currency pegged [at parity](https://www.investopedia.com/terms/p/parityprice.asp) to the Indian rupee. Issued in 1959 by the Indian government, the Gulf rupee was for use outside of India, particularly in the Persian Gulf region. Like the Indian rupee, the Gulf rupee was pegged to the [British pound sterling (GBP)](https://www.investopedia.com/terms/g/gbp.asp).

In 1961, Kuwait gained independence from the United Kingdom with the end of treaties put in place after the defeat of the Ottoman Empire.

Kuwaiti Currency Law created the Kuwaiti Currency Board, which later became the Central Bank of Kuwait, with the purpose of establishing a Kuwaiti currency. The Central Bank of Kuwait introduced the Kuwaiti dinar as a replacement for the Gulf rupee. Until 1966, both currencies circulated, but the use of the rupee ended after its [devaluation](https://www.investopedia.com/terms/d/devaluation.asp).

From 1975 to 2003, the Kuwaiti dinar was [pegged](https://www.investopedia.com/terms/p/pegging.asp) to a weighted currency basket. The content of the currency basket was mandated by the Central Bank of Kuwait. In 2003, the KWD was pegged to the [U.S. dollar (USD)](https://www.investopedia.com/terms/forex/u/usd-united-states-dollar.asp) at 0.29963 dinars to the dollar. This valuation continued until 2007, when it was formally re-pegged to an undisclosed basket of currencies.

As of July 2024, one Kuwaiti dinar is worth about $3.27, making it one of the most valuable currencies in the world.

The State of Kuwait has a petroleum product-based economy, with 90% of government revenues coming from the oil industry. The State of Kuwait is a tax-free country, with one of the [lowest unemployment rates](https://www.investopedia.com/articles/personal-finance/062315/unemployment-rates-country.asp) in the world.

The [Kuwait Investment Authority (KIA)](https://www.investopedia.com/terms/k/kia.asp) is the oldest sovereign wealth fund in the world, and the investment industry of the country manages more assets than any other member of the Gulf Cooperative Council (GCC), a regional economic and political union.

## Issuance of the KWD (Kuwaiti Dinar)

There have been six official issues of the Kuwaiti dinar banknotes since the first circulation in 1961. There have also been two commemorative sets circulated.

The third series, released in 1980 upon the crowning of Emir Jaber al-Ahmad al-Jaber al-Sabah, was in use until Iraq invaded Kuwait in 1990. Upon invasion, the Iraqi government installed the Iraqi dinar as the official currency for the area.

### $161.77 Billion

The GDP of Kuwait in 2023, which fell from to $182.81 billion in 2022.

The invading Iraqi forces stole an enormous number of Kuwaiti dinar banknotes. With the liberation of Kuwait, the invalidation of the third dinar issue forced the replacement of the fourth issue of the currency in 1991.

The 1994 series implemented enhanced security features.

The sixth series came in 2014 with bills specially textured so blind and vision-impaired people can identify them by touch.

## KWD (Kuwaiti Dinar) Exchange Rate

Between July 2014 and July 2024, the Kuwaiti dinar fluctuated between $3.17 and $3.54. That means that it costs between $3.17 and $3.54 to buy one Kuwaiti dinar.

The higher [rate](https://www.investopedia.com/terms/e/exchangerate.asp), $3.54, means that the Kuwaiti dinar appreciated in value, or the U.S. dollar had fallen in value relative to the dinar. If the rate falls, that means that the Kuwaiti dinar is losing value, or that the U.S. dollar is gaining value relative to it.

Due to its relatively low volatility, and limited global trade, the Kuwaiti dinar is not typically used as a speculative trading instrument. If it were, a trader would attempt to buy near the lower end of its historical range, and try to sell near the top of it. Buying at $3.17 and selling at $3.54—the price range over 10 years—represents an 11.67% profit, not including fees and commissions.

This is why most traders and investors stay away from trading this currency unless they feel a major fundamental shift may be forthcoming that could cause a major shift in the value of the currency.

## How Is Kuwaiti Currency Pegged?

The Kuwaiti currency is pegged to a basket of currencies as opposed to one currency. The basket of currencies is not disclosed but is expected to be heavily weighted toward the U.S. dollar.

## Why Is the KWD So Valuable?

The KWD is so valuable because the demand for the currency is very high. The economy of Kuwait is primarily dependent on oil, but not only that, it is a stable country that uses its oil revenue efficiently, unlike many oil-rich countries. In addition, it is a large exporter of oil. Because the demand for global oil is high, the demand to pay for it in Kuwaiti currency is also high, making the KWD a very valuable currency.

## Is Kuwait’s Currency More Valuable than the U.S. Dollar?

Yes, Kuwait’s currency is more valuable than the U.S. dollar because the demand for the KWD is high due to Kuwait being a large producer of oil. That being said, the U.S. dollar is the world’s reserve currency and is accepted more widely.

## The Bottom Line

The Kuwaiti dinar is the most valuable currency in the world due to Kuwait’s strong and stable economy, whose strength comes from its vast oil reserves and tax-free economy. This creates a high demand for the Kuwaiti dinar.

> **Article Sources**
>
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> 3.  Xe. “[1 KWD to USD—Convert Kuwaiti Dinars to U.S. Dollars](https://www.xe.com/currencyconverter/convert/?Amount=1&From=KWD&To=USD).”
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