Why is Kuwaiti Dinar the highest-valued currency in the world and what at the consequences of this exchange rate vs. the dollar on oil prices? Below are answers I got from the web which are subjected to critical reasoning and debates;

Before answering the question , let's examine some facts , to make sure you and I are on the same page.

1 Kuwaiti Dinar =US$3.27 = £2.64 = €3.08

Now let's move onto the question , most people question this and it's a good question.

So , to answer this you have to know something about import and export.

Import - when a good/service is brought into one country

Export - when a good/service is sold to another country

Now imagine you are a country A's President , your people are really hard-working and talented but your patch of land lacks natural resources , so what do you do?

You make money for your country on the hardwork of your people and you import those resources from countries who are blessed with it.

Now if you have a currency A$ and the country which you are imported from has B$ , so how will you buy stuff?

You'll buy B$ for your A$ in your international market thus rising the demand and value for B$ and making its value go up.

(This is over simplification , it's very complicated and many factors are involved here)

So in the above example , country A are countries like the US , UK , Japan etc. Country B are countries like Kuwait , Saudi Arabia etc. And the resource is Oil. It's so useful that demand is always high and the Middle Eastern countries do not compete , they coordinate and mark up the price as they want.

And there currency's value go up and up and up.

Countries like the US , UK , India try to control this using Monetary policy this attracting foreign investment and exports but middle eastern countries don't want either.

That's my explanation for why the Dinars and Dirams are always flying.

Some of the reasons why Kuwaiti Dinar has a high value:

First of all, it is a fixed rate currency, so it maintains its high value without being directly affected by market supply/demand. It is the central bank which has decided to peg the Dinar to the US dollar, in order to make oil export even more profitable.Kuwait has nearly 10% of the world's oil reserves.Petroleum accounts for nearly half of GDP.Petroleum also accounts for 95% of export revenues and government income.Kuwait has a well-developed banking system (that can actually maintain this fixed rate).Kuwait is a tax free country.

However, the country seems to delay some diversification methods and does not change its economic view (It heavily counts on oil) . Yet, it may be a problem for the long term future, as people will try to switch to electric cars, solar batteries, etc.

I hope this was informative!

Regards,

Bob Parker

The exchange rate between any two currencies at a single point in time is largely meaningless. A government can introduce a new currency and declare its value to be anything it wants, and as long as people are willing to accept that value, that's what it is.

A currency unit is basically a unit of measure, and the relative size of that unit is based on a reference point. In the past a single currency unit may have been based on a certain quantity of gold or silver. Today, many countries peg their currencies to another currency or a basket of currencies. The Kuwaiti Dinar is pegged to a basket of currencies roughly equal to $3.60. Meanwhile, the Chinese Yuan is pegged to a basket of currencies roughly equal to $0.16. It's the same concept, China just uses a smaller basket as its reference point.

Another way to think of it, some people measure water in gallons, and some measure it in liters. A gallon is about 4 times larger than a liter, but that doesn't mean that people who use gallons have more water.


The Kuwaiti dinar started its life as being pegged to one of the highest valued currencies in the world ( The British Pound ), and kept its value better due to the reasons listed in the other answers (oil revenues, the basket of currencies it had been linked to, etc.) 

If it started out as having been equal in value to the Indian rupee ( like the UAE dirham) it would have 3/40ths of its current value, given the then peg between the Indian rupee and pound sterling.

If it had lost value as quickly as the Israeli Lira ( which is 1/10000th the value of the current Israeli currency the Israeli new shekel), it would have been worth approximately 1/30000th of a US Dollar.


From what I understand, Kuwait is one of the major exporter of Oil. Kuwait has proven crude oil reserves of 104 billion barrels (15 km³),estimated to be 10% of the world's reserves. and the country’s economy earns the 75% part of its income from this. Being a tax-free country, Kuwait's oil industry accounts for 75% of government revenue. Petroleum and petrochemicals accounts for 43% of GDP and 90% of export revenues.

Their main imports include wide range of basic necessities ranging from food products and textiles to machinery. 
Hence, they benifit by pegging their exchange rate at a high level as this earns them more income because their exports are much more valued than their imports. (In 2011, estimated exports stood at US$94.47 billion and imports were around US$22.41 billion).

Note: 1 Kuwaiti Dinar equals N1,193.69 (Nigerian Naira)!

https://www.quora.com/Why-is-Kuwaiti-Dinar-the-highest-valued-currency-in-the-world-and-what-at-the-consequences-of-this-exchange-rate-vs-the-dollar-on-oil-prices

mrjaydee:

You should be more worried why your country, Nigeria, an oil producing nation as Kuwait is the country with the highest poor person on earth when it should be one of the best with a strong currency and best place to live on earth rather than just sitting on a fence smoking weed.

These evil and corrupt politicians have finished our dear country patapata.

If Nigeria had good leaders right from time, this country will be better in 10 folds more than Dubai and many European countries.

Well, its rather late than never.
GOD BLESS NIGERIA.

Ratello:


You should be more worried why your country, Nigeria, an oil producing nation as Kuwait is the country with the highest poor person on earth when it should be one of the best with a strong currency and best place to live on earth rather than just sitting on a fence smoking weed.

beCause Nigerians are blacks, and blacks are retrogressive animals who Never get things right.

1 naira = 1 dollar once upon a time

KalakutaRepubli:

beCause Nigerians are blacks, and blacks are retrogressive animals who Never get things right.

That's just you. Am worried if everyone around you is a retrogressive animal. You guys need a psychologist

Ratello:


You should be more worried why your country, Nigeria, an oil producing nation as Kuwait is the country with the highest poor person on earth when it should be one of the best with a strong currency and best place to live on earth rather than just sitting on a fence smoking weed.

Kuwait

Population : 4 million (2016 estimate)

Oil Production: 4.75 million barrels a day.


Nigeria

Population : 190 million (2017 estimate)

Oil Production: 2.53 million barrels a day.

Waoh...learnt something

OkoyeA1:
Waoh...learnt something

Please what did you learn?

Only when our leaders will stop looting our money can Nigeria top the world richest country list. We have the manpower and all that is necessary to move Nigeria forward but those on top keep fighting corruption whereas they're the CORRUPTION itsefl. ONE DAY THING MUST BETA!

Jona said it naija is not a poor country wealth distribution is the problem