AMMAN
— Experts and bankers concur that the
Central Bank of Jordan's (CBJ) foreign
reserves are at comfortable and reassuring levels, and that last month’s slight
decline in foreign reserves has had no significant impact on the national
economy.
اضافة اعلان
According
to the statistical bulletin issued by the CBJ, the bank’s foreign reserves
declined in the first month of this year by 0.8 percent compared to the level
at the end of last year, reaching JD12.68 billion, compared to JD12.79 billion
at the end of 2021.
Banker
Muflih Aqel said that the decline has no significant effect because it is a
small, negligible, percentage, the level of reserves is comfortable and does
not pose any danger to the stability and safety of the dinar exchange rate,
gold prices, inflation and economic stability.
Asked
whether there is any connection between the decline in foreign reserves and the
recent bank acquisitions — Jordan Capital
Bank acquired Societe Generale Bank Jordan and the Arab Jordan
Investment Bank acquired the
National Bank of Kuwait — Aqel said that Jordanian
banks acquire non-Jordanian banks due to the latter’s need for liquidity, to
their failure to garner a good share of the local market due to the limited
spread and, thirdly, because of citizens’ preference to conduct transactions
through local banks, for the ease of dealing with them.
Secretary of the General Syndicate of Owners of Jewelry and Jewelry Trade and Crafting Rebhi Allan said that the
price of gold locally is not affected by any internal event, thus not affected
by the decline in foreign reserves, but rather follows changes in gold prices
globally; these, he said, are decided by the level of supply and demand, which
in turn is determined by crises and global events and the financial data on the
dollar exchange rate, which is the main player.
Allan
said that since the beginning of the
Ukrainian crisis, a month ago, gold price
increased globally by $100 per ounce, and that
was reflected on the local price through the equivalent of JD2 for each weight
of gold and its different carats.
The
reason, he said, is that when a global crisis arises, investors turns to gold
as a safe haven that preserves their wealth, which increases the demand for
gold and brings the price up, as a result.
Writer
and economic analyst Salama Al-Darawi, who works as a consultant for the
Jordanian Banking Association, denied any effect from this decline because the
foreign reserves are currently at levels, sufficient to cover the Kingdom’s
needs for up to 9 months.
He
added that in the banking sector, acquisitions have a significant role in
increasing the economic and financial base of banks and that merger policies
are a healthy indicator of the health and vitality of the banking sector.
Before
the recent mergers, Jordan had 24 banks, “a number that matches and exceeds
what exists in the
economies of large countries, even in European countries”,
said Darawi, adding that the competition between foreign banks and local banks
was weak because of the share of foreign banks in the Jordanian market, which
was modest in relation to the goals they were seeking to achieve.
Jordanian banks have a competitive advantage, as evidenced by the fact that more than 60
percent of the ownership of their shares belong to non-Jordanians, a liquidity
ratio that is more than 136.2 percent, he added.
Investment
in the banking sector is one of the most feasible in Jordan, said Darawi,
adding that “the recent acquisitions by Jordanian banks of a number of foreign
banks reflect the strength of the banking sector, which is a major and real
supporter of the
economy, and an attraction for investment”.
Did
the decline in foreign currency change demand on dinars or other currencies in
local market? A well-known bureau of exchange employee said that supply of and
demand for
Jordanian dinars and foreign currencies is at normal levels and he
did not notice any change during the last period.
The
CBJ annual report (2019) considered the value of foreign reserves, which was
lower than it is now, at $14.3 billion, as being at comfortable levels,
according to the international standards used to measure the adequacy of
foreign reserves, and said that it was sufficient to cover the Kingdom’s
imports of goods and services for three months.
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