Tourism, trade negatively affected by the euro-dollar exchange rate

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AMMAN — The exchange rate of the euro against the dollar, witnessed a sharp decline on Tuesday when the euro reached its lowest in 20 years, being almost equal to the US dollar.اضافة اعلان

This decreases the value of the debt and the cost of repaying Jordan’s foreign debts denominated in euro and reflects on to stability of foreign reserves at the Central Bank of Jordan, say economists.

This decline in the exchange rate constitutes benefits Jordan economically, economic analyst Mohammad Akef Al-Zu’bi told Jordan News, adding that it will reduce the value of the external debt denominated in euro and have a positive impact on Jordan.

He warned, however, that this is only a short-term occurrence, and that it has a negative impact on the trade and tourism sectors.

“The value of the debt rises and falls with the decrease in exchange rates. In the short term, the benefits resulting from the public debt are due to the fluctuation of the euro exchange rate, but in the long run, it is a neutral effect,” Zu’bi said.

“The decline in the exchange rate will weaken the competitiveness of Jordanian exports, which is already weak in the European market, and will increase the competitiveness of goods imported from the EU. The trade balance will be affected in the tourism sector due to this decline in the exchange rate,” he added.

Vice President of the Jordan Chamber of Commerce Jamal Al-Rifai told Jordan News that “there is both harm and benefit in the trade sector due to the low exchange rate of the euro against the dollar, which has an impact on imports.

As for Jordan’s exports to Europe, “the European market will need to buy products from Jordan. Our case is like the case of other countries exporting to Europe, because the exchange rate is linked to the dollar more than the euro,” Rifai added.

The tourism sector, according to the chairman of Jordan Inbound Tour Operators Association, Awni Kawar, tourism from Europe will be greatly affected.

“The value of the decline represents the profit margin achieved by workers in this sector, which means a great loss for them,” he said.

“Offers are being made for incoming tourists from now on and they are fixed at a certain price. When the euro fluctuates, the low exchange rate means incurring a loss as the profit margin goes into the currency difference, and we are talking about amounts in the hundreds of thousands,” Kawar added.

“Tourism from Europe to Jordan recovers in March, April, May, September, October, and November. The other half of the year is not considered an active season. The current damage is related to the bills for the past period. Also, the European tourist will pay larger sums when exchanging the currency, and this is reflected in the decline of the already weak tourist movement in this period,” he said.

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