MUSCAT: Oman’s financial sector witnessed significant developments as narrow money surged by an impressive 24.8%, complemented by an 8.4% increase in quasi-money. Quasi-money, encompassing savings deposits, time deposits, certificates of deposit, margin accounts, and foreign currency deposits, was pivotal in driving this growth. Demand deposits notably increased by 33.2%, showcasing strong liquidity within the economy. However, cash held by the public experienced a decline of 5.9%, reflecting a shift in financial preferences.
Interest rates within the conventional banking sector also showed moderate upward trends during the period. The weighted average interest rate on Omani riyal deposits rose from 2.531% in October 2023 to 2.709% in October 2024, signaling higher returns for depositors. Simultaneously, loan interest rates saw a rise from 5.452% to 5.628%, reflecting adjustments aligned with market dynamics and central monetary policies. These changes highlight the evolving financial landscape and the balancing act between savings and borrowing rates.
Interestingly, the overnight interbank lending market recorded a decline in average interest rates, dropping from 5.584% in October 2023 to 4.681% in October 2024. This reduction was primarily attributed to a decrease in weighted average interest rates on repurchase operations. These movements are in line with the policy adjustments of the US Federal Reserve, emphasizing their impact on Oman’s interbank operations and financial stability.
Overall, these shifts in money supply and interest rates indicate a dynamic interplay of monetary policy and market forces in Oman. The growth in quasi-money and adjustments in interest rates underscore the resilience of the Omani financial sector amidst global and regional economic changes. These trends provide insights into the ongoing efforts to maintain economic stability and promote sustainable financial growth in the Sultanate.
