Kuwait, famously one of the fastest-growing economies, has the strongest currency in the world – the Kuwaiti Dinar. This country offers beautiful sand dunes and a modern cityscape. While religion is an integral part of Kuwait, this is one of the most liberal countries around the Persian Gulf area.
The Kuwaiti modern financial market was established in 1991 post the Iraqi invasion. It offers a secure and safe environment for trading Forex, stocks, and other commodities. This Middle Eastern country is strategically located, with Iraq and Saudi Arabia on its borders. The Central Bank of Kuwait (CBK) controls the trading markets. It imposes strict laws of its brokers to ensure the safety of the investors.
Kuwait is a member of the Gulf Cooperation Council. Its main stock exchange is Boursa Kuwait which was earlier known as the Kuwait Stock Exchange (KSE). CBK regulates all the brokers and the trade is majorly done in the home currency, the Kuwaiti Dinar.
You must always familiarize yourself with the trading options that are offered by the brokers of a country. In Kuwait, you have a number of options, ranging from Indices and ETFs, Forex, CFDs, cryptocurrencies, and commodity markets. You can discuss this with your broker in detail to find out your best match.
Trading with Kuwaiti Dinar Brokers
There is a general perception that Kuwaiti brokers only work with native investors but such is not the case. They work with Kuwaiti brokers as well. While the country offers some of the best trading brokerages in the Middle East, there are certain guidelines that you will be expected to follow while trading in Kuwaiti assets.
Before you set up a trading account, you need to find Kuwaiti Dinar Brokers who are licensed and are directly regulated by the CBK. the next thing would be to safeguard your funds. Make sure that your broker keeps your funds in a separate account and his access to that money is limited. This will keep your broker from your money in case he goes bankrupt.
Look for Kuwaiti Dinar brokers who allow you to open a demo account with them. Open multiple accounts with multiple brokers. This practice will help you in getting practical knowledge of how different trading platforms work and you will gain experience without using real money.
There are numerous trading platforms that are offered by Kuwaiti brokers to their online clients. For example AXi and MT4. You can also talk to them about mobile trading apps that could be used in trading Forex, CFD, stocks, and other commodities.
Advantages of Trading in Kuwait
Kuwait is not a huge country. The majority of its population include includes and professionals on a work visa. It stands on the 7th place in terms of paying taxes and holds 69th rank in registering property, as per the reports issued by the World Bank.
The Middle Eastern country has an on-going large electricity generation project. The government is also focusing on developing a new airport, some major roadways, and a new metro system. For this, they are importing transportation equipment in large numbers from countries like the USA. Most of the funding is allocated to defense projects and securities.
Economic studies have shown us that high imports often lead to depreciation of a currency as the country starts losing their assets. Such is not the case with Kuwait. Despite such high imports, the Kuwaiti economy is flourishing for one main reason – the export of petroleum. This has been enough to keep the Kuwaiti Dinar as the strongest currency in the world. Another reason for the growth of the economy is the growing population. The growth of the population is creating business opportunities for many companies.
Disadvantages of Trading in Kuwait
For the last two decades, it is the export of petroleum that has been keeping the trade balance intact. 95% of their export is of oil. If the country stops exporting petroleum, it will end up with a negative balance of trade. This means that any disturbance in the Middle East can greatly affect the import and export balance of Kuwait. Also, if there is a significant fall in the prices of oil, the country’s economy will take a set-back.
While the Kuwaiti economy is strong, it is not very welcoming. According to the World Bank, the country ranks 159 in ease of doing business, 133 in obtaining credit, and 134 in trading across borders. It is not easy to get electricity for business here as compared to other Middle Eastern countries. It could be said that Kuwait has a somewhat closed economy.
Another universal trading problem that exists in Kuwait as well is of defrauding. Due to the digitization of financial trading, it has become easier for fake brokers to dupe the investors. So, before you finalize any broker, make sure that they pass the checklist for brokers that we have shared below.
The Verdict on Kuwaiti Dinar Brokers
Regulated Kuwaiti Dinar brokers strictly abide by the guidelines issued by the Central bank of Kuwait. Thus, creating a safe financial market. The country has been growing steadily because of a positive trade balance.
The government has realized that the downfall in the prices of petrol can adversely affect the growth of the economy. Therefore, they have undertaken various development projects. These major projects will keep the Kuwaiti economy afloat should there be a decline in the price of petroleum or disturbances in the Middle East.
Forex Trading in Kuwait
Let’s begin with answering the most frequently asked question – is Forex trading legal in Kuwait?
Yes, Forex trading is legal in Kuwait. This concern haunts many traders because countries with Sharia law, like Pakistan, often make Forex trading illegal. Such is not the case with Kuwait. In fact, it is a very active market in Kuwait. Forex is used in import and export and has become an integral part of the economy. Kuwait also invests internationally.
Forex trading has been on a steady rise in Kuwait for the past five years. There has been a stable growth in technology and network coverage in Kuwait. Both factors have a positive effect on the growth of Forex trading.
All you need to do is to be careful in selecting a Kuwaiti Dinar broker. If you move ahead with a regulated broker, all you would need is a good strategy to further your profits.
Paying Taxes on Forex Trading in Kuwait
Understand the taxation system of the country where you are planning to trade should be an integral part of your business strategy. If you are making certain profits in a financial year, you are expected to pay the taxes to the Kuwaiti government. You must file your taxes irrespective of the percentage of profits or losses that you have encountered during a financial year.
Understanding the taxation system of a different country can be a cumbersome task. If you feel that you need some assistance, do not hesitate to hire an expert who can ensure that your taxes will be filled at the right government agencies. You are also eligible for claiming trade losses against personal income taxes in Kuwait. Your expert will guide you through it. Kuwait does not impose additional restrictions on Islamic accounts.
Kuwait and Cryptocurrency Trade
The cryptocurrency market is fairly new in Kuwait. While many major economies have banned the trade of virtual currencies like Bitcoins, Kuwait is moving forward with it. You can open an account and sign up for a secure wallet and take things further after that.
As the young generation is warming up to technology, there has been a significant increase in cryptocurrency trade in Kuwait. It is expected to rise more in the coming years.
Commodity Trading in Kuwait
Countries like China and India are growing rapidly in terms of infrastructure and population. This means that there will be demand for petrol, metals, food. Kuwait can tap on this demand for its advantage and expand its business.
Checklist for Finding the Ideal Kuwaiti Dinar Broker
There are numerous things that you need to keep in mind while selecting a broker. Irrespective of how perfect your trade strategy is, if your broker is not right, all will be in vain. So, before you finalize a Kuwaiti Dinar broker, ask them the following question:
Q1. When were they established?
Ideally, your broker must have a minimum trade history of at least two years. This is the minimum requisite. If they fail to show proof of this, you should move to a different broker. There are brokers who have been offering their services in Kuwait for more than ten years, like Hotforex and Avatrade. They are the most trusted brokers in the field. If you feel uncomfortable with a new broker, you can always collaborate with these two.
Q2. What is their global standing?
Everybody investor, whether new or old, wishes to work with industry leaders but established brokers often charge a hefty fee. You don’t have to be only with the best to earn profits. Just make sure that your broker has an international presence and is known otherwise. This will ensure that they are genuine and will keep the option of expanding trade in different countries open.
Q3. How much will they cost you?
You can pay commissions or fees or both to your broker. While most brokers will discuss it with you before signing anything, some might refrain from this question. Be wary as these are some red flags. Always discuss commissions and fees in advance with your Kuwaiti Dinar brokers to avoid sharing a huge chunk of your profits later on.
Q4. How good is their customer support?
If you think that your broker will make you their priority and pick up your call at the first ring then you are mistaken. Yes, they will treat you justly but you need to understand that you will not be their only client. So what will you do when there is an emergency and it is the middle of the night in their country? Here, customer care will come to your rescue. You will also need customer care support to overcome any language barrier. So, don’t forget to ask your broker about the languages that are offered by their customer support.
Q5. What are their funding and withdrawal methods?
Having easy funding and withdrawal methods not only make trading easier but creates a security blanket for you as well. In case you decide to close a trade or withdraw your deposit, you will not have to wait for months to get hold of your money. Go ahead with a broker who offers withdrawal within 2 to 3 days’ time.
Q6. Who is their regulatory body?
You must bever trade with a broker who is not regulated. Most Kuwaiti Dinar brokers comply with the rules set by the Central bank of Kuwait. You must check their license before making any commitments. If you are replying to international traders like Hotforex and Avatrade, you must check their license and regulatory bodies as well. Both of the above-stated industry leaders are regulated by the Cyprus Commission, Financial Services Authority (FSA), and the Australian Securities and Investment Commission (ASIC).
Our Comprehensive Comparison Table of Kuwaiti Dinar Brokers
First, you should make sure that your trader is licensed and regulated. In addition to that, there are various other factors that make a broker a good choice. We have a comparison table of top brokers keeping the following factors in mind:
- The minimum deposit required
- Availability of funding
- Trading platforms offered
- Variety of commodities traded
- Spread type for each brokerage
- Level of customer support
- Accounts offered by the brokers (Islamic, Standard, VIP, and Micro)
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Use the above table and educate yourself as much as possible before finalizing your broker. Kuwait offers a safe and secure market but things can move in the opposite direction if you are not with the right broker. Thus, it all comes down to choosing the right one.