History of Omani Rial

[Bimat]

Omani rial shares a common history with many of its neighbors

18/11/2012 1:38 pm

Our nation's currency is ever-present in our daily lives, but how often do we wonder how our modern day coinage came in to being? The history of a nation's currency is often as interesting as its general history, reflecting similar periods of domination from outside entities that eventually yield to national independence.

In Oman, our legal tender is the Rial, which is also subdivied into 1,000 baisa. Spanish, Austrian, and British empires have played small roles along the way, but the Rial has been the official currency since 1970.

The history of the Rial begins as far back as 400 years ago, back during the era of exploration. At that time, the prevailing international currency was the Spanish Dollar, more popularly known as 'pieces of eight'. This unique phrase evolved because the dollar coin was worth eight 'reales' and could be physically cut into eight pieces, or 'bits', to make change. These silver coins were minted in the New World and quickly became legal tender across the globe.

As the British Empire expanded their influence in the 1800s, they reversed an earlier policy that replaced local tender for the Pound Sterling. For this reason the Indian Rupee remained prominent in its homeland, and, as Indian laborers immigrated to other shores along the Indian Ocean, the Rupee gained prominence along the east coast of and across the horn of Africa, through Aden and Muscat in Southern Arabia and Eastern Arabia, and along the coast of the Arabian Gulf, extending even as far inland as Mesopotamia.

The Rupee facilitated trade along these shorelines, but in the interior of Oman, the Maria Theresa Thaler prevailed, another silver coin, but of Austrian origin. This coin was referred to locally as the 'rial' and was worth roughly one quarter of the Rupee's value. Before 1940, both currencies co-existed in Oman, but new coins were minted thereafter that were denominated in 'baisa' with 200 baisa equivalent to one 'rial'. In 1970, a new rial Saidi coin was created, but replaced in 1973 by the rial Omani. This 'Rial' was equal in value to £1 or Rs21.

Fast forward to the present, and we have the present day Rial. From 1973, the Rial has been pegged to the U.S. Dollar, a reasonable convention since oil commodity prices are stated in dollars, as a rule. Oman's economy is highly dependent on oil prices in the international market, and since 1986, the peg has been fixed at $2.6 to 1 Rial. Pegged currencies do not float in the global foreign exchange market. It cannot be traded in the daily forex dealings, but for those that wish to learn more about forex trading, there are many helpful websites devoted to that task, whether for standard or Islamic accounts.

Since today's Rial is a 'pegged' currency, the Central Bank of Oman (CBO) must be ever vigilant to protect against rising inflation by employing various market tools. Inflation did hit double-digits back at the height of the recession in 2008, but it has subsided. In a recent CBO report, the bank stated, "The overall outlook for Oman remains positive in 2012 despite heightened downside risks to global recovery." GDP growth has been in the 4-5 cent range for the past few years, but the most significant problem for unemployment.

Since the Rial is tied to the US dollar, the inflation differential between the two regions may put pressure on current exchange rates. In this case, the history of the Rial may have to change once more.

Source: Muscat Daily

[Figleaf]

This was written by a financial journalist, not a historian. He has seen the relation between pegging and inflation differences (plenty of officials didn't, until the Asian crisis of 1997 rattled their teeth), but not that a rupee was exchanged for about a quarter rial, not the other way around.

It would have been interesting to mention that the name in its Arabic context originated in Iran. However, in a European context it came from Spain (real), Portugal and Britain (10 shillings). Another interesting angle would have been the Cambodian riel.

Peter

[Harald]

It would have been interesting to mention that the name in its Arabic context originated in Iran. However, in a European context it came from Spain (real), Portugal and Britain (10 shillings). Another interesting angle would have been the Cambodian riel.

And of course the ariary (where the etymology is a little less obvious).

[Coinsforever]

Not a surprising article.

There has been  quite extensive historical relations between India & Oman that is being maintained until today.

The article is silent about fluctuation in oil prices worldwide  that has also affected Oman's economy over a period of time and alike other oil producing  nations tempted them to diversify.


Economy - overview CIA Fact book:

Oman is a middle-income economy that is heavily dependent on dwindling oil resources. Because of declining reserves and a rapidly growing labor force, Muscat has actively pursued a development plan that focuses on diversification, industrialization, and privatization, with the objective of reducing the oil sector's contribution to GDP to 9% by 2020 and creating more jobs to employ the rising numbers of Omanis entering the workforce. Tourism and gas-based industries are key components of the government's diversification strategy. By using enhanced oil recovery techniques, Oman succeeded in increasing oil production, giving the country more time to diversify, and the increase in global oil prices through 2011 provided the government greater financial resources to invest in non-oil sectors.


Further interesting facts about Oman are as follows :
1.The only Hindu sheikh of Arab world is a Gujarati
2. Active Hindu temples in & around Muscat

3. His Majesty Sultan Qaboos 's ministry do have Kutch Gujarati (Indian ) in prominent advisory /strategic position.
4. From the period of Harappan civilization strong ties were existed between both nations.
5. Due to trade & early migration from Kutch , usage of currency & postage were allowed with quite liberal policies were maintained towards India.


Cheers

[ciscoins]

At that time, the prevailing international currency was the Spanish Dollar, more popularly known as 'pieces of eight'. This unique phrase evolved because the dollar coin was worth eight 'reales' and could be physically cut into eight pieces, or 'bits', to make change.

I haven't heard about that before. Do you know other examples when a coin was cut into pieces to make change?

The most popular version of the origins of the word "rouble" is that it derives from the verb "rubit" - "to cut". But these were, supposedly, only some silver bars, not coins; and it is not proved that the first roubles were pieces chopped from some bigger bars. So it's just a legend. But this example with spanish dollars - yes, it means, that cutting coins was an ordinary practice at least in some parts of the world.

[Figleaf]

http://www.worldofcoins.eu/forum/index.php/topic,169.0.html

Also, ruble comes from the Russian verb rubit, but that's not quite fair, because them wuz silver bars, not coins being chopped.

Peter