MUSCAT: The money supply in the Sultanate of Oman experienced notable expansion, with the broad money supply (M2) increasing by 2.4 per cent on an annual basis to reaching RO 21 billion by the end of March 2023. Simultaneously, narrow money supply witnessed a growth of 0.3 per cent.
The rise in the broad money supply can be attributed to a 3.3 per cent increase in quasi-money, which encompasses savings and term deposits in Omani Rials, certificates of deposit issued by banks, margin accounts, and all deposits in foreign currency held within the banking sector. Conversely, cash on hand experienced a decrease of 5.2 per cent, while demand deposits showed a modest increase of 1.9 per cent.
Regarding the interest rate structure of conventional commercial banks, the weighted average interest rate on deposits in Omani Rials increased from 1.923 per cent in March 2022 to 2.124 per cent in March 2023. In contrast, the weighted average interest rate on loans in Rial Omani decreased from 5.485 per cent to 5.381 per cent during the same period.
Furthermore, the average interest rates in the inter-bank lending market for one night witnessed an increase, rising to 5.073 per cent in March 2023 compared to 4.409 per cent in March 2022. This change was influenced by the weighted average interest rate on repurchase operations, which reached 5.323 per cent, compared to 0.5 per cent during the same period last year, in line with the policies of the US Federal Reserve (ONA).
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