The Kuwaiti Dinar’s Struggle for Dominance
Kuwait’s official currency was first introduced in the early part of its existence. The first coins were made during the reign of Kuwait’s fifth Amir, who ordered the use of an official currency in an attempt to state Kuwait’s independence. These coins were all made by hand with a hammer, so each coin looked a little bit different than the others. Each misshapen coin was equal to one paisa.
This coin was only on the market for a few months. It was withdrawn for a few different reasons. Kuwait was already using the Rupee of Queen and Empress Victoria and the Indian paisa, so the second, handmade series of coins caused confusion and problems in the economy. The Indian paisa currently owned the market, so the introduction of another coin did not stick, and Kuwait had no gold reserve to compete with the stability of the Indian paisa, which had ample amounts of gold to back it.
Despite this first attempt to replace another country’s coin in Kuwait, the country did not give up as it worked towards its economic independence. In 1961, the first dinar was introduced to replace the rupee. At this point, all Indian coins and banknotes were withdrawn from the country and the Kuwaiti dinar obtained dominance in the Kuwaiti financial market.
Some of the first banknotes bore the faces of the Amir and the Chief Council of Finance at the time. Other notes showed images of renaissance landmarks. Though these coins and banknotes were working, it was a rocky time for the economy. Finally, in 1968, the Central Bank of Kuwait was formed, which brought a semblance of order and stability to the currency.
Though the currency and economy of Kuwait were finally beginning to thrive, the glory was short-lived. In 1990, Iraq invaded and conquered Kuwait, successfully replacing the Kuwaiti dinar with the Iraqi dinar. Large quantities of the Kuwaiti dinar banknotes were stolen from the Central Bank of Kuwait and the country was in a state of turmoil.
The United States took it upon itself to help liberate the fallen country from Iraqi rule. The country led an attack on Iraqi forces in an effort to remove them from the country, beginning what became known later as the Gulf War. In 1991, the United States succeeded in moving Iraqi forces, and Kuwait was returned to its former glory. The Kuwaiti dinar found its rightful place back at the center of the Kuwaiti economy, where it has resided ever since.
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