Jordan does not intend to drop US currency peg

Amman: Jordan will keep its currency pegged to the dollar and may buy the US currency to take pressure off the dinar, central bank governor Umayya Toukan said.

Dropping the dollar peg is "not a topic right now. It's not for discussion," Toukan said in an interview yesterday in Basel, Switzerland, where he's attending the Bank for International Settlements annual general meeting.

"There may come a time when we will intervene in the market to take some upward pressure off our currency by buying dollars with dinars."

Middle East central banks are being watched for signs of changes in their monetary policies after Kuwait and Syria both said in the past six weeks they would drop their currencies' pegs to the dollar. Toukan has previously said inflation in Jordan is caused by higher fuel costs and not by the weaker dollar.

Right direction

"Inflation will return to normal levels of between three and four per cent in the medium term'' from about 5 per cent this year, he said yesterday.

Jordan's economy is doing well and there are no currency problems on the horizon, the country's central bank governor said yesterday.

"I am optimistic when I look at all variables and find that they are in the right direction," central bank governor Umayya Toukan said.

GDP growth

"Overall the performance (of the economy) is gratifying," he said. "We will still have robust growth at 6 per cent."

"GDP growth in the first quarter was still robust, external debt is falling, reserves are growing, which is gratifying."

Jordan's foreign currency reserves stand at $6.3 billion, or "about six months of imports, which is very comfortable," Toukan said.

"I think it shows we have the right configuration of interest rates, exchange rates and inflation rates."

The country is also on track to reach its debt goals. "We are not far from the 60 per cent target for our debt as a percentage of GDP," he said.

The good performance was a result of political and economic reforms together with fiscal and monetary discipline, he said.