Jordan's central bank to continue dinar-dollar peg

Amman - The Governor of the Jordan Central Bank (CBJ) on Sunday defended tying the Jordanian national currency, the dinar, to the US dollar, saying the policy proved helpful for national exports. He said that the dinar-dollar peg, which was adopted in 1995, was instrumental in "boosting confidence in the national currency as an attractive tool for deposits."

"The policy has shored up the competitiveness of the Jordanian exports and helped to attract foreign investments into the country," he said in an interview with the official Petra news agency.

Touqan also defended the policy of credit squeezing the CBJ has adopted to deal with the spillovers of the financial crisis that hit the world economy in the fourth quarter of 2008.

He reported a 25-per-cent decline in the profits of commercial banks operating in Jordan in the first half of 2009, but said that the retreat could have been larger in the absence of the strict monetary policy pursued by the CBJ over the past 12 months.

"The CBJ adherence to international supervision and audit criteria has helped Jordanian banks to face the repercussions of the global financial crisis with the minimum negative effects," Touqan said.

He said that toxic loans as a ratio of total loans extended by Jordanian commercial banks increased to 6.4 per cent in 2009, from 4.2 per cent in 2008, due to the world financial crisis.

Touqan said that the CBJ would continue in 2010 to adopt policies that focus on "the stability of the dinar and the banking system".

He expected the Jordanian economy to grow at a rate of 4.5 per cent in 2010.