Oman to continue dollar peg, sees more growth
Mar 16, 2010 at 09:11
MUSCAT - Oman will continue to maintain its currency peg to the dollar and is not reconsidering a decision to pull out of a planned Gulf Arab monetary union at this time, the Gulf country's central bank head said on Tuesday.
"We shall continue to maintain that peg," central bank Executive President Hamood Sangour al-Zadjali told Reuters on the sidelines of an economic conference.
When asked whether there were any other policy options considered for the currency at the moment, he said: "No".
The non-OPEC producer pulled out of a planned monetary union with Gulf neighbours in 2006, and was followed by the United Arab Emirates in 2009. Kuwait, which runs the six-nation Gulf Cooperation Council (GCC) this year, has made bringing the UAE and Oman back into the union a priority of its presidency.
"It (the union) will certainly bring benefits for the region but as for Oman, it decided not to rejoin," Zadjali said in remarks ahead of a meeting of GCC central bank governors in Kuwait next week.
Monica Malik, chief economist at regional bank EFG-Hermes, said it was beneficial for the GCC countries to hold onto their U.S. dollar pegs.
"The key issue will be any future weakness in the US dollar and a need for GCC countries to develop independent monetary policy," she said.
ECONOMIC GROWTH
Zadjali gave an upbeat forecast for growth in the Gulf Arab sultanate, which weathered the global economic crisis better than more oil-rich Gulf states because as a non-OPEC member it was not obliged to join the cartel's prescribed output cuts.
"It (economic growth) will be very positive for Oman. It will be around 6 percent," he said. Oman's economy minister, also speaking on Tuesday, said growth was seen at 6.1 percent.
The forecast is higher than analysts' forecast of 4 percent economic growth in Oman when polled by Reuters in January.
Zadjali also predicted an uptick in inflation but said it would not be to "a level that would cause any difficulty".
"It will be within expected limits, between 4 to 5 percent," he said.
Economy Minister Ahmad bin Abdul-Nabi Mekki forecast in January that 2010 inflation would be at 3.5 percent. Analysts polled by Reuters forecast 2010 inflation at 4 percent.
"We continue to see inflation picking up, driven mostly by housing price increases as Oman continues with their investment programme and (due to) the external factors such as a pick-up in global food prices," Malik said.
Oman saw inflation of 3.4 percent in 2009, sharply below 12.5 percent in 2008 as the global economy cooled down.
Data this week showed Oman's inflation accelerated to 1.7 percent year-on-year in January, from 0.9 percent in December.
Mar 16, 2010 at 09:11
MUSCAT - Oman will continue to maintain its currency peg to the dollar and is not reconsidering a decision to pull out of a planned Gulf Arab monetary union at this time, the Gulf country's central bank head said on Tuesday.
"We shall continue to maintain that peg," central bank Executive President Hamood Sangour al-Zadjali told Reuters on the sidelines of an economic conference.
When asked whether there were any other policy options considered for the currency at the moment, he said: "No".
The non-OPEC producer pulled out of a planned monetary union with Gulf neighbours in 2006, and was followed by the United Arab Emirates in 2009. Kuwait, which runs the six-nation Gulf Cooperation Council (GCC) this year, has made bringing the UAE and Oman back into the union a priority of its presidency.
"It (the union) will certainly bring benefits for the region but as for Oman, it decided not to rejoin," Zadjali said in remarks ahead of a meeting of GCC central bank governors in Kuwait next week.
Monica Malik, chief economist at regional bank EFG-Hermes, said it was beneficial for the GCC countries to hold onto their U.S. dollar pegs.
"The key issue will be any future weakness in the US dollar and a need for GCC countries to develop independent monetary policy," she said.
ECONOMIC GROWTH
Zadjali gave an upbeat forecast for growth in the Gulf Arab sultanate, which weathered the global economic crisis better than more oil-rich Gulf states because as a non-OPEC member it was not obliged to join the cartel's prescribed output cuts.
"It (economic growth) will be very positive for Oman. It will be around 6 percent," he said. Oman's economy minister, also speaking on Tuesday, said growth was seen at 6.1 percent.
The forecast is higher than analysts' forecast of 4 percent economic growth in Oman when polled by Reuters in January.
Zadjali also predicted an uptick in inflation but said it would not be to "a level that would cause any difficulty".
"It will be within expected limits, between 4 to 5 percent," he said.
Economy Minister Ahmad bin Abdul-Nabi Mekki forecast in January that 2010 inflation would be at 3.5 percent. Analysts polled by Reuters forecast 2010 inflation at 4 percent.
"We continue to see inflation picking up, driven mostly by housing price increases as Oman continues with their investment programme and (due to) the external factors such as a pick-up in global food prices," Malik said.
Oman saw inflation of 3.4 percent in 2009, sharply below 12.5 percent in 2008 as the global economy cooled down.
Data this week showed Oman's inflation accelerated to 1.7 percent year-on-year in January, from 0.9 percent in December.