The Jordanian Dinar (JOD) is the official currency of Jordan. Its symbol and abbreviation are JOD. The dinar is subdivided into smaller units: 1 dinar equals 10 dirhams, 100 qirshes, and 1,000 fils. The dinar is not only used in Jordan but also circulates in Israel’s West Bank.
Key Highlights
- The Jordanian dinar (JOD) has been the national currency since 1950.
- It is pegged to the U.S. dollar at a rate of 0.7090 per dollar since 1995.
- Pegging to the dollar ensures currency stability, attracting deposits to local banks.
- Issued notes bear the country’s full name, the Hashemite Kingdom of Jordan.
- Current banknote denominations are 1, 5, 10, 20, and 50 dinars.
The History and Structure of the Jordanian Dinar
The dinar replaced the Palestinian pound in July 1950, the currency used during the British Mandate of Palestine and Emirate of Transjordan since 1927. After independence, the Jordan Currency Board was established to manage the issuance of the dinar. In 1959, the Central Bank of Jordan (CBJ) took over these responsibilities.
Modern Usage
The current banknotes in circulation, issued by the CBJ, feature denominations of 1, 5, 10, 20, and 50 dinars. Originally, the dinar coins featured Arabic text, which was changed to English in 1992. The Jordanian dinar ranks among the world’s most valuable currencies.
Why Jordan Pegs the Dinar to the USD
Jordan pegged the JOD to the U.S. dollar to introduce financial stability. A consistent exchange rate minimizes currency fluctuations, making Jordan an attractive destination for foreign investment. However, pegging limits the Central Bank of Jordan from influencing the dinar’s value in response to national economic conditions.
For instance, if the U.S. dollar strengthens, the dinar’s buying power adjusts accordingly, affecting local commerce distinct from the Jordanian economic climate.
Economic Context and Impact
Jordan reported a GDP of $45 billion in 2021, projected to grow to $47.5 billion in 2022. Though pegging offers stability, it also means the Jordanian central bank can’t easily modify monetary policy based on domestic economic demands such as recession or growth spikes.
Understanding the JOD to USD Peg
The JOD maintains a fixed exchange rate against the USD: 1 USD equals 0.7090 JOD. Suppose you transfer $1,000 to Jordan, you would receive 709 Jordanian dinars. This fixed rate remains unchanged, unlike floating currencies adjusting frequently to market dynamics.
Evaluating the Strength of the Jordanian Dinar
Despite Jordan’s modest economic size, the JOD maintains its strength largely due to being pegged to the stable U.S. dollar. This stability appeals to investors seeking low-risk opportunities.
The Rationale Behind the High Value of JOD
The pegged exchange rate minimizes wild fluctuations, ensuring the dinar remains consistently strong. Jordan’s meticulous monetary policy supports this fixed valuation.
Why the Peg Matters
By linking the JOD to the USD, Jordan mitigates financial volatility. The U.S. dollar’s global stability helps anchor the Jordanian financial system, fostering more investment and enhanced economic development.
Calculating Exchange Rates Involving JOD
To determine the JOD conversion to any currency, tools such as currency converters simplify the process. Given the fixed peg, 1 USD equals 0.709 JOD consistently.
Conclusion: The Impact of JOD and Its Peg on Jordan’s Economy
The Jordanian dinar represents the Kingdom of Jordan’s financial stability, credited significantly due to its peg to the U.S. dollar since 1995. While Jordan enjoys a reliably strong currency and financial marketplace, ongoing regional tensions and inefficiencies within the public sector challenge broader economic expansion. Nonetheless, this stability continues to incentivize foreign investment and drive the nation’s economic resilience.
Related Terms: Foreign investment, Monetary policy, Currency pegging, Economic stability.
References
- Central Bank of Jordan. “Introduction”
- FXSSI. “Top 10 - Highest Currency in the World in 2021”.
- UPI. “Jordan Pegs Dinar to U.S. dollar.”
- Statista. “Jordan: Gross Domestic Product (GDP) in Current Prices From 1986 to 2026”.
- XE. “1 USD to JOD - Convert US Dollars to Jordanian Dinars.”
