WHAT IS 'JOD (Jordanian Dinar)'

The Jordanian Dinar is the currency for the Kingdom of Jordan. It is divided into units of 10 dirham, 100 qirsh, and 1000 fulus. The nation’s banknotes are issued in denominations up to 50 dinars. In addition to its use in Jordan, the dinar also continues to circulate along with the Israeli shekel in the West Bank, even after Israel took control of that region in 1967.

BREAKING DOWN 'JOD (Jordanian Dinar)'

The dinar was first introduced in 1950. It replaced the Palestinian pound, a currency which had circulated in the British Mandate of Palestine and the Emirate of Transjordan (a British protectorate) since 1927. That was shortly after the British took control of the region following the collapse of the Ottoman Empire.

When Jordan became in independent country in 1946, the Jordan Currency Board was formed to create a new currency to be issued and circulated within the Kingdom.

The dinar has been pegged to the International Monetary Fund's Special Drawing Rights since October of 1995 and unofficially pegged to the U.S. dollar — most recently at an exchange rate of approximately 0.709 dinar per U.S. dollar, or about $1.41 per one Jordanian dinar.

Exchange Controls to Maintain Economic Growth

A currency’s relative valuation to other currencies is determined in part by a nation’s monetary policy, which is managed by its central bank. Although many currency exchange rates are allowed to float on global markets based on supply and demand, others such as the Jordanian dinar are subject to exchange controls imposed by governments or central banks.

The Central Bank of Jordan (CBJ) operates under objectives to “maintain monetary and financial stability, to ensure the convertibility of the Jordanian dinar, and to contribute in achieving the banking and financial stability in the Kingdom” and does so by “setting a pricing policy for the Jordanian Dinar compatible with the Jordanian economy.”

Furthermore, the CBJ operates with a framework that emphasizes a fixed exchange rate as a “nominal pillar” of its monetary policy, which was established to contribute to Jordan’s ability to attract foreign investment, maintain the competitiveness of its exports, and keep inflation under control.

According to data from the World Bank, Jordan’s gross domestic product (GDP) measured in U.S. dollars grew 46 percent between 2010 and 2016 while the inflation rate dropped from 8.4 percent to 1 percent. The World Bank also predicts that the nation’s GDP will grow at an annual rate of 2.5 percent by 2020.

In August 2016, the International Monetary Fund Board of Directors approved a three-year extension of participation its Extended Fund Facility (EFF) to help support Jordan’s economy and to sustain more inclusive growth.

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