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Currencies
OMANI RIAL
Introduction | Overview | Structure | History | Factors affecting change in exchange rates | Daily trend of Omani rial | Weekly trend of Omani rial
Introduction


Rial or riyal refers to the Arabic currency unit that serves as an official currency to most of the countries belonging in the Arabian Peninsula. Iranian rial, Saudi riyal, Omani rial, Qatari riyal and Yemeni rial are examples of rial denominated currencies. Rial stands among the most highly valued currency being one of rial denominated currency i.e. Omani rial placing itself among the top five highest valued currencies in the world.

Omani rial has been serving as the national currency of the sultanate of Oman since the year 1973. "Baiza" divides the currency into 1000 equal parts. In Arabic language, Omani rial is written as "ريال" and denoted with the symbol "ر.ع". According to the ISO 4217 regulation, the currency code for it is OMR and the numeric code for the currency is 512.

Overview


Like most of the other countries in the Middle East, the economy of Oman is largely characterized by large oil and gas resources. It stands among the best economies in the Arabia though smaller in size comparatively. The low inflation rate in the country helps the economy to sustain stability and it helps the government in its attempts to attain self-dependency. Further, the economical stability makes the currency of Oman a safe investment. Omani rial is one of the highest valued currencies of the world ranking 4th after Kuwaiti dinar, Maltese lira and Bahraini dinar. Like Kuwaiti dinar, Omani rial is also counted among one of the few currencies that are broken up into 1000 equal parts by their subunits.

The currency of the country had been pegged to the US dollar from the very start. The rial-dollar exchange rate was fixed from 1973 to 1986 @ 1 rial = 2.895 dollars but in 1986, slight adjustments were made. The Omani rial was devalued and a new fixed exchange rate was set up i.e. 1 rial = 2.6008 dollars that continues even today. The import and export of the local currency as well as foreign currencies is free, the exception being the Israeli shekel that is banned in the country.

Structure

Omani rial is one of the very few currencies in the world that are divisible in 1000 equal parts by its subunit i.e. "baiza", most of them divisible in 100 subunit parts. Oman adopted rial as its national currency in the recent past and hence; it is one of newer currencies. Banknotes dominate the currency as a wide range of face values are issued in the form of banknotes and fewer denominations are issued as coins. Coinage is issued in just 4 denominations that are 5, 10, 25 and 50 baisa. Since rial has been adopted as the national currency of the country, the pattern and design of the coinage in the currency remains unchanged. The obverse of all the coins is embossed with the national emblem of Oman, two crossed swords super imposing a khanjar dagger in its sheath. The reverse side of the coin depicts the value of the coin written in Arabic numerals.

The paper currency form of Omani rial has got 8 denominations printed for circulation namely 100, 200 baisa, ˝, 1 rial, 5, 10, 20 and 50 rials. Omani rial banknotes have always been popular as compared to the banknotes of other currencies prevailing in Arabian Peninsula. The pattern of banknotes too, didn’t have to face drastic changes since the currency had been introduced and they look pretty much the same. The current series notes that are still accepted as legal tender were issued in 1995 and 2000. The notes in circulation can be categorized in 2 types on the basis of their designs; 1st type consisting of banknotes having values lower than and equal to 1 rial and the 2nd type consisting of notes higher than 1 rial. The design differs for both the types and the latter category of notes was even re-issued in the year 2000. On the right hand side of the front of each note is shown a portrait image of Sultan Qaboos bin Said. Each note possess images of different forts and landscapes on each side, details being mentioned below

  • 100 baisa note - Front side of the note shows the Falais Irrigation system and the back shows an Oryx, wildlife and Omani birds

  • 200 baisa note - Images of Seeb and Salalah airports on the front and Sultan Qaboos Port, Raysut Port and Fisheries Centre on the backside
  • ˝ rial note - Bahla castle on the obverse side and Nakhal Fort and Al-Hazm Castle on the reverse side
  • 1 rial note - Obverse side possess images of Burj Al-Sahwa and Sultan Qaboos Sports Complex and the reverse side shows Omani gambia (dagger), traditional Silver jewelry, and traditional shipbuilding
  • 5 rial note - Sultan Qaboos university image on the front and an image of an aerial view of Nizwa town on the backside
  • 10 rial note - Picture of Al-Nadha tower in Salalah and some trees on the obverse and backside have an image showing an aerial view of Muttrah Fort and Corniche
  • 20 rial note - Image of the headquarters of the Central Bank of Oman on the front side of the note and  images of important buildings like the Muscat Security Market and Oman Chamber of Commerce.
  • 50 rial note - Front side shows Ministry of Finance and Economy and Mirani Fort and the backside has the picture showing the Cabinet Building and Ministry of Commerce and Industry building

The function of the reserve bank is performed by the Central Bank of Oman, which was established in 1974.

History


Before the sultanate of Oman gained independence in 1970, it did not have its own currency. Muscat and Oman were different independent states at that time and a cluster of currencies circulated in there including most importantly rupees and thalers and also dollars, pounds, dinars, annas etc. This was due to the dominating location of the states in context of ancient sea trade routes that so many currencies were present at one place. Maria Theresa Thaler usually circulated on the center areas and the Indian rupee on the outskirts of the states. These currencies were subdivided by "baiza" and it was lowest denomination coin at that time. In 1959, Indian Gulf rupee (XPGR) was launched and the Indian rupee circulating in the gulf countries got replaced with it at par.

With the establishment of the new state, a new national currency named Rial Saidi (OMS) was issued that took gulf rupee’s place @ 1 saidi = 21 gulf rupees. The value of rial saidi was almost equal to the British pounds and the function of printing of banknotes was in the hands the states of Muscat and Oman. In 1972, another new currency with the name Rial Omani replaced the previous one at par, the reason for it being the accession of sultan Qaboos bin Said. In 1973, Oman currency board was formed and it was entitled with the function of issuing currency for the state. But still, it was not provided with all the functions and authority a central bank possess. The Central Bank of Oman was created in 1974, taking over the place of the currency board.

Since 1970, five banknote series have been issued, the fifth still in circulation. The first series was issued in 1970 in "rial saidi" units by Muscat Currency Authority in 6 denominations. These notes were withdrawn in November 1976. The second bank note series was issued in 1972 with a changed currency unit from the previous series i.e. in Rial Omani under the reign of Sultan Qaboos bin Said. Oman Currency Board issued the banknotes for the first time, denominations being the same as the first series. This series was taken off completely from the market in 1979. The establishment of the central bank called for the need for the issue of the third bank note series in 7 denominations (2 supplementary issues also in 1982 and 1985 respectively) in 1976. All this while, Bradbury Wilkinson & Co. had been printing the banknotes for the country. The fourth issue of the banknotes was done from 1985 up till 1994; services from a different printing company named Thomas de la Rue were taken this time. The series consisted of 9 denominations and had new and improved technological features. The fifth banknote series was issued in 1995 and is still in circulation, revision being done in the year 2000.

Factors affecting the exchange rates between two countries


The volatility in the foreign exchange rates depends upon a numerous macro economic factors that have different degrees of importance to different economies of the world. Some special and exceptional factors affecting the rates may also exist in the case of different countries. Following are shown the common factors on which the foreign exchange rate depends

  • Flow of imports and exports between the countries
  • Flow of capital between the countries
  • Relative inflation rates
  • Fluctuation limits on exchange rate imposed by the governments of the countries
  • Merchandise trade balance
  • Rate of inflation in the country
  • Flow of funds between the countries for the payment of stock and bond purchases
  • Relative growth
  • Short term and long term interest rate differentials
  • Cost of borrowings
 
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