Times of Oman | News :: Should the Sultanate drop rial peg to dollar?:
"The rial peg to the dollar was a sensible decision taken four decades ago as the United States was driving the global economy but its floundering finances and internal political bickering is forcing the once mighty nation to lose its grip on the treasury.
Oman would not be the first nation in the Gulf Cooperation Council (GCC) if it were to drop the peg of its currency to the dollar. Kuwait did it in 2007 and so far remains the only country in the GCC to do so. Oman and its regional political allies pegged their currencies to the dollar to minimise foreign exchange volatility, encourage investments and international trade.
True, the peg to the greenback made sense then because all regional countries exported oil and there was a great need to receive payments in the once most stable currency in the world.
Many critics say that sticking to the dollar peg is as good as devaluing the rial since the US currency is losing its strength consistently against major currencies of the world. Oman and its neighbours are big buyers of the dollar dominated assets and the need to diversify its portfolio away from the US currency is very pressing."
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