The drop in the value of the US dollar, to which the Omani rial is pegged, is favourable for Oman's non-oil exports which have recorded an impressive growth over the past few years.
A weak dollar is making Oman's non-oil products more competitive in non-dollar denominated markets like India and China whose currencies are appreciating against the dollar.
However, exporters of non-oil products are also concerned over the cost of imported raw materials - which have shot up sharply, due in part to the falling dollar and higher commodity prices.
According to government data, non-oil exports grew by 38.6 per cent to RO718mn compared to RO518mn in the corresponding period last year.
In 2010, Oman's total non-oil exports surged by 32 per cent to RO2.45bn, surpassing Public Authority for Investment Promotion and Export Development's (PAIPED) target of RO2.1bn.
Manufacturers of non-oil products believe that the falling dollar has been a mixed blessing for them as the weak greenback boosted Omani exports, but negatively impacted import of raw materials.
Nicholas Barakat, managing director of Octal, a large manufacturer of plastic packaging items which exports to 40 countries, said, "The non-oil export business grew as Oman diversified and reached out to new markets."
"If you buy raw materials from dollar-denominated markets and sell it in non-dollar markets then it has a positive effect on export value. But due to fluctuations in value of currency it becomes complicated to manage foreign exchange and raw material costs also goes up."
S Gopalan, chief executive officer of Reem Batteries & Power Appliances, said, "Most of our exports are GCC bound. A falling dollar does not help goods headed to GCC and other dollar-denominated markets."
"Raw materials are becoming expensive due to higher global commodity prices and weak currency. Due to the unrest in the Middle East, exports to UAE have declined which had been used as a re-export platform for Omani products to MENA markets."
Liz Martins, senior economist at HSBC Middle East Limited, said the weak dollar would make Omani exports cheaper for Asian buyers.
"Oman's non-oil exports go primarily to GCC and Asia. So while the currency is stable against GCC partners, it will be cheaper for Asian buyers, whose currencies are appreciating against the dollar."
"That does increase competitiveness there. However, the potential benefits could be offset by a slowing global economy which could hit demand for Omani non-oil exports, and the effect of a weak currency on import costs."
Oman's non-exports to China surged by 168 per cent to RO95mn in the first quarter, while exports to India grew by 48 per cent to RO73mn. On the other hand, the value of non-oil exports to UAE, Oman's largest non-oil trading partner, declined by 17 per cent to RO112mn in the same period.
