Subject: Clarification on Oman Regulation No. BM/REG/033/11/1989 - Future Transactions in Foreign Exchange and Precious Metals

1. The subject Regulation was advised to you under Oman Central Bank Circular No. BM545/1989 and discussed at the Bankers’ Meeting of December 4, 1989. The Regulation prohibits banks from engaging in future transactions of a speculative nature, while permitting future transactions of a “trade-related” nature. Spot operations are not touched upon in said Regulation.

2. The intent of the Regulation is to remove from the banking system all speculation for Banks’ accounts or on behalf of customers’ orders in currencies and precious metals, while allowing genuine needs to be fully serviced, unhampered.

3. The Regulation defines trade-related transactions as

   • a) those having a basis in commercial, industrial, or agricultural activity, or additionally,

   • b) those determined by CBO to be of a trade-related nature.