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Tue 16 Mar 2010 09:25 AM

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Oman to continue dollar peg, sees higher growth

Oman not reconsidering joining Gulf monetary union - central bank official.

Oman to continue dollar peg, sees higher growth
GROWTH TRACK: Oman central bank head sees growth at 6 percent in 2010.(Getty Images)

Oman will continue to maintain its currency peg to the dollar, and expects economic growth to rise to 6 percent in 2010, the Gulf country's central bank head, Executive President Hamood Sangour Al Zadjali, said on Tuesday.

"We shall continue to maintain that peg," 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 this year, has made bringing the UAE and Oman back 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.

The central banker gave an upbeat forecast for economic growth in the Gulf sultanate.

"It (economic growth) will be very positive for Oman. It will be around 6 percent," he said.

Zadjali 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.

Data this week showed Oman's inflation accelerated to 1.7 percent year-on-year in January, from 0.9 percent in December.

The country will likely issue OR122m ($317m) in domestic bonds at the end of 2010 but does not expect to issue debt on international markets, Al Zadjali.

"We will probably be issuing 122 million (rials) to replace (maturing bonds) toward the end of the year on the domestic market," Al Zadjali said.

When asked if any international issues were likely in 2010, he said: "I don't think so." (Reuters)