CBJ governor says dinar-to-dollar peg best policy for nat’l economy

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(Photo: Envato Elements)
AMMAN — Governor of the Central Bank of Jordan (CBJ) Adel Sharkas said that the fixed dinar-US dollar exchange rate, in place since 1995, is “the best and most appropriate policy” for the Jordanian economy, and a cornerstone for macroeconomic stability and sound monetary and banking management.اضافة اعلان

During a recent meeting with the members of the Jordan and Amman Chambers of Commerce and representatives of the Jordanian Businessmen Association, Sharkas emphasized the importance of the current exchange rate policy in boosting the competitiveness of national exports and fostering an investment-friendly climate, the Jordan News Agency, Petra, reported.

Interest rate hikeThe recent decision by the central bank to increase the benchmark interest rate on monetary policy instruments aims to keep inflation under control and maintain the allure of the dinar as a competitive savings vehicle, thereby cementing the country's monetary stability, he said, noting that current global forecasts consistently predict interest rates will fall in 2024.

The CBJ governor also stated that changes in interest rates should not be reflected immediately on loans, but should take three to six months, depending on the pricing cycle specified in the contract between the borrower and the lender.

On this topic, he noted that the central bank has increased the benchmark interest rate by 450 basis points since March 2022, while lending rates at banks have increased by no more than 119 basis points.

Sharkas highlighted the CBJ’s" comfortable" foreign reserve balance of JD17.2 billion, which is enough to pay for the Kingdom's imports of goods and services for about 7.5 months. Following the interest-rate hike, the CBJ governor added, dinar-denominated deposits with local banks grew by 7 percent to reach JD42.1 billion, while credit facilities picked up by 8.5 percent to reach JD32.6 billion.

Consumer costsKhalil Haj Tawfiq, president of the Jordan Chamber of Commerce, asserted that the rise in interest rates has increased the cost of borrowing for citizens and business owners, and he urged the central bank to ask commercial banks to delay loan payments for individual and business borrowers before the month of Ramadan.

Haj Tawfiq also called on the CBJ to maintain its funding for programs that assist importers of essential goods and to maintain its commitment to small and medium-sized businesses.

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