Ammon News -

Governor of the Central Bank of Jordan (CBJ) Adel Sharkas has said that a fixed dinar/dollar exchange rate, in place since 1995, is the best and most appropriate policy for the Jordanian economy, and is a cornerstone for macroeconomic stability and sound monetary and banking management.

Sharkas also emphasized the importance of the current exchange rate policy in boosting the competitiveness of national exports and fostering an investment-friendly climate. The CBJ governor made the remarks during a meeting with the members of the Jordan and Amman commerce chambers as well as representatives of the Jordanian Businessmen Association.

Sharkas explained that the recent decisions by the Central Bank to increase the benchmark interest rate on monetary policy instruments were made to keep inflation under control and to maintain the allure of the dinar as a competitive saving vehicle, thereby cementing the country's monetary stability. He noted that current global forecasts consistently predict interest rates will fall in 2024.

The governor of the Central Bank 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.

Here, he mentioned that the central bank had increased the benchmark interest rate by 450 basis points since March 2022, while lending rates at banks had increased by no more than 119 basis points.

Sharkas emphasized the Central Bank'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 a total of JD42.1 billion while credit facilities picked up by 8.5 percent to JD32.6 billion.

Khalil Haj Tawfiq, president of the Jordan Chamber of Commerce, asserted that the rise in interest rates 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 Ramadan.

Haj Tawfiq urged 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.