Khaberni - The financial markets in Jordan are witnessing a continuous state of anticipation regarding the fluctuations of the US dollar, as this globally strongest currency clearly marks local investment decisions. When the dollar rate moves up or down, the Jordanian trader feels it in every transaction they make. With the Jordanian dinar having been closely linked to the dollar for decades, understanding the implications of the dollar's rise and fall has become essential for ensuring the success of trading operations in Jordan. In this article, you will embark on a comprehensive analytical tour that sheds light on the current context of the Jordanian currency market, and what dollar fluctuations mean for you as an individual trader or institution in the kingdom.
The Dollar and Dinar: A Close Relationship and Historical Stability
The Jordanian dinar is tied to the US dollar at a fixed rate of about 0.709 dinar per dollar since October 1995. This link has made the dollar/dinar exchange rate one of the most stable in the region, with very minor changes over the years. For example, the exchange rate was 0.7090 dinar per dollar in October 2025 and remained stable with negligible change (annual decrease of less than 0.1% only). This stability is attributed to a strict monetary policy by the Central Bank of Jordan aimed at maintaining the stability of the currency's value. For your information, the highest historical rate recorded by the dollar against the dinar was about 0.83 dinar in 2002 when the dollar was strong globally – indicating that the range of fluctuation is limited even in extreme cases.
Global Dollar Fluctuations and Their Impact on the Jordanian Market
You might wonder: If the dollar/dinar rate is almost fixed, how do global dollar fluctuations affect us in Jordan? The truth is that you, as a consumer or investor in Jordan, are indirectly affected by the dollar's movements against other currencies. When the US dollar strengthens globally against major currencies, the dinar (linked to the dollar) likewise gains greater purchasing power. This means that imports from Europe and Asia, for example, become cheaper in dinars, which helps curb local inflation and stabilize prices. Rating agencies have noted that linking the dinar to the dollar has indeed helped to contain inflation at moderate levels (around 2.2% for 2025). Conversely, when the dollar weakens globally and its price falls, the value of other currencies rises compared to the dinar, which can lead to an increase in the cost of imports from those countries and a rise in local prices as a result. In other words, if the dollar falls you will see an increase in prices for goods imported from Europe and Asia, slightly weakening the dinar's purchasing power (as it will buy fewer goods from those currencies) according to expert analysis. Thus, global dollar stability provides the Jordanian economy with a kind of price tranquility that reflects on your daily life, especially if you are trading and following markets via a demo trading account to test the impact of dollar movements on currency pairs before making real investment decisions.
The Central Bank of Jordan's Policy: A Shield Against Dollar Fluctuations
The Central Bank of Jordan plays the role of the monetary stability guardian, using several tools to insulate the local market from external dollar fluctuations. One of the main tools is maintaining a positive interest margin in favor of the dinar compared to the dollar. This means you get relatively higher returns on dinar deposits compared to dollar deposits, which encourages keeping dinars and limits dollarization (conversion of savings to dollars). This policy has succeeded in reducing the dollarization rate in the Jordanian banking sector to about 18% only, a low rate compared to other countries, reflecting local confidence in the dinar. Additionally, the Central Bank has built up record foreign reserves reaching more than $20 billion by the end of 2024— a comfortable level that covers kingdom imports for several months and acts as a safety stock in case of any pressures on the exchange rate. These huge reserves (which exceeded $21 billion in early 2025) give the Central Bank the ability to defend the dinar's peg to the dollar under any circumstance. In addition, the Central Bank keeps pace with the moves of the US Federal Reserve (the US central bank) by raising or lowering local interest rates in line with maintaining the dinar's attractiveness. For instance, during the period of rising US interest rates in 2022-2023, Jordan raised interest rates several times by a total exceeding 4% to maintain the dinar's attractiveness and exchange rate stability. And as the Federal begins to move towards stabilizing and then lowering interest rates at the end of 2024, the Central Bank of Jordan made its first interest rate cut in years by 50 basis points in September 2024, and it is expected that an easing policy will continue throughout 2025 in line with its US counterpart. This alignment ensures that you as a borrower or investor do not find a large gap between the return on the dinar and the return on the dollar, thus maintaining your confidence in the dinar supported by sound monetary policies.
The Impact of Dollar Fluctuations on Individual Traders
If you trade forex or stocks as an individual in Jordan, you undoubtedly closely follow the news of the US dollar and its movements. Despite the stable local price of the dollar against the dinar, the dollar's strength or weakness globally affects the opportunities available to you in the markets. For example, a rise in the dollar globally often leads to lower prices for global commodities (such as oil and metals) due to the inverse relationship between them. For you as a trader, the dollar's strength may mean opportunities to buy oil or gold at lower prices in dinars and make profits when their prices rise later. On the other hand, a weak dollar may boost emerging markets and other currencies, so you may see markets like the euro or the British pound increase in value; here you might think about diversifying your portfolio and buying those currencies before they rebalance. Remember that most assets are priced in dollars globally, so any change in the dollar's strength requires you to adjust your strategy. For instance, during periods of significant dollar strength against other currencies, you might find it better to hedge (hedging) on your open positions or reduce your exposure to high-risk assets, because a rise in the dollar usually accompanies a decline in risk appetite in emerging markets. Conversely, when the dollar starts to decline this might be an indicator for you to increase exposure to stocks or other assets that will benefit from the dollar's weakness globally. In short, you as an individual investor need to follow the dollar index and trends, since a single decision by the Federal to raise interest rates can strengthen the dollar and trigger fluctuations in emerging market currencies including the environment you trade in. Make monitoring the dollar a fundamental part of the analysis tools you use daily.
The Impact of Dollar Fluctuations on Companies and Institutions
The impact of dollar changes is not limited to individual traders only, but also extends to Jordanian companies and investment institutions. Many local companies rely on raw materials or imported products priced in US dollars or other currencies affected by its movements. For example, if you run a company that imports electronic components from Europe, a rise in the dollar against the euro (i.e., a drop in the euro compared to the dinar) would be good news as it would reduce the import bill and help improve profit margins. Meanwhile, exporting companies that sell their products in dollars abroad may benefit from the dollar's strength because they receive revenue in the higher-valued dollars when converted to the local dinar. However, conversely, a weak dollar globally can mean that your exports (priced in dollars) bring back less returns in dinar when converted. From another angle, dollar movements affect investment flows to Jordan; foreign investors monitor their currency's value against the dinar. If these investors feel that the dollar will lose its strength (i.e., potentially decrease the value of their investments when converted later), they may hesitate to invest money or even withdraw some of their investments from the local market. The opposite is true; when the dollar is strong and stable, it increases the attractiveness of the Jordanian market as a relatively safe haven. It should be noted that the Jordanian stock market is not insulated from being affected; since global volatilities (including dollar movements) psychologically reflect on dealers, we've previously seen how global market disturbances pushed local investors towards safe havens like the dollar and gold, leading to declines in the Amman Stock Exchange. Thus, major financial institutions in Jordan build risk management models that take into account scenarios of rising or falling global dollars, and put in place strategies for hedging against indirect exchange rate changes.
Recent Statistics: The Dollar Against the Dinar in Numbers
Let's take a look at some recent numbers that highlight the reality of the dollar's impact on the Jordanian market: the official exchange rate maintained a level of 0.7087-0.7090 dinar per dollar throughout 2024 and until October 2025, meaning that the change was very limited, not exceeding fractions of a cent during this period. Thanks to this stability, Jordan has managed to maintain a low inflation rate (around 2% currently) despite inflation waves sweeping many countries. On the other hand, foreign currency reserves at the Central Bank of Jordan rose to an unprecedented level above $20 billion by the end of 2024, compared to about $18 billion at the beginning of 2022. This increase was accompanied by a decrease in the dollarization rate from 19.4% in 2022 to 18.5% by mid-2024, indicating an increase in public confidence in the local currency during a period when the dollar was experiencing global fluctuations. On the interest rate front, the basic interest rates in Jordan reached 6.25% at the end of 2024 following a series of consecutive rises in line with the US Federal policy, before starting the trend towards lowering them to stimulate the local economy with the stabilization of the dollar. These data confirm that Jordan managed to navigate the recent global dollar fluctuations with relative success, maintaining monetary stability and a moderate growth rate of about 2.6% for 2023 – a rate that surpasses many emerging economies under those conditions. It is also worth mentioning that Standard & Poor's agency fixed Jordan's sovereign credit rating at BB- during 2024 with a stable outlook, partly based on the prudence of monetary policy and linking the dinar to the dollar, which maintained the strength of local prices.
How Should You as a Trader Deal with Dollar Fluctuations?
And now we come to the important question: What should you do to confront dollar fluctuations? Firstly, it is essential that you continuously keep up with global economic news; an unexpected decision by the Federal Reserve regarding interest rates or a change in the tone of US monetary policy can immediately move the markets. You need to be ready to adjust your trading plans based on this. Secondly, always think about diversifying your portfolio in preparation for any sudden change. Do not place all your investments in assets that are only negatively affected by a rise in the dollar, nor in those that only thrive with its weakness – try to achieve a balance that protects you in both directions. Thirdly, use financial hedging tools like futures or options to protect your open positions from unexpected changes in exchange rates. For instance, if you have a significant investment in local stocks or bonds and fear a rise in the dollar globally that may affect foreign investment flows, you can buy gold or currency options that make a profit if the dollar rises to offset any potential losses in your portfolio. Fourthly, do not forget to take advantage of the opportunities provided by dollar fluctuations instead of fearing them. Many savvy traders reap profits through speculation on global currency volatilities; you can also open positions on major currency pairs (like Euro/Dollar or Dollar/Yen) via global trading platforms to directly benefit from the dollar's rise or fall. Finally, make sure you have a clear and well-thought-out risk management strategy; set an acceptable loss level (Stop Loss) for each deal affected by the dollar, and do not hesitate to use it to protect your capital. Always remember that the market provides permanent opportunities, so there is no need for undue risk-taking – the important thing is to stay in the game and benefit from previous volatility experiences to build more prudent decisions in the future.
EMBED YOUTUBE VIDEO ON SITE HERE: https://www.youtube.com/watch?v=iSWA67bzSxQ
Future Outlook: Will the Dinar Remain a Safe Haven?
Experience has proven that the Jordanian dinar – thanks to its firm peg to the dollar – has represented an anchor for monetary stability in the toughest economic storms. As we enter 2025, the forecasts indicate that global inflationary pressures are beginning to recede, and the Federal Reserve may be heading towards further interest rate reductions. This scenario likely means the continuation of relative dollar stability or even a limited decline in its value, giving the Central Bank of Jordan more room to maneuver to support local economic growth through gradual monetary easing without fear of losing the dinar's attractiveness. For example, the Fitch global agency – expects the interest rate in Jordan to be reduced by a total of 125 basis points by the end of 2025 in line with US monetary policy, which could stimulate domestic spending and investment without harming exchange rate stability. At the same time, the Jordanian economy continues to achieve balanced growth (accelerating to about 2.5% expected for 2025) supported by the subsidence of regional tensions and improved capital spending. These data support the opinion that the Jordanian dinar will remain a safe haven and a cornerstone of confidence for investors, as long as current policies continue. However, wisdom always requires close monitoring of any unexpected developments in the global scene – the world has witnessed rapid shifts in recent years, and all you need as a trader is to stay alert and flexible. In conclusion: take advantage of our local currency stability, and make dollar fluctuations work for you by reading the economic landscape more broadly. This way, you can make sound trading decisions that reap profits and spare yourself sharp fluctuations. Remember that knowledge is your strongest weapon in the financial world, and knowing the impact of the dollar on Jordanian markets is a fundamental step on your path to success as a professional trader.
