Rising Dollar = Rising Dinar

The exchange rate of the Jordanian dinar rises immediately and almost in the same proportion as the dollar due to the dinar's linkage and fixed rate against the US currency, even though the Jordanian economy is stable and inflation is within acceptable limits. However, the Central Bank is forced to deal with the US interest rate to ensure a comfortable difference between the interest rates on the dinar and the dollar to prevent dollarization. This is the tax of linking the dinar to the dollar.

One of the positive effects of the rising dollar exchange rate is the reduction in the cost of imports and the value of debt denominated in non-dollar currencies, but this is a temporary reduction that ends as soon as the dollar declines.

On the other hand, there is a price, and that is the increase in the cost of exports!

There is no doubt that raising interest rates locally increases the cost of borrowing, whether for current borrowers or those considering borrowing, but this is a price that can be borne in exchange for controlling inflation, which eats away at purchasing power more than high interest rates do.

Stabilizing prices and costs in such circumstances, when the whole world is experiencing economic disruptions with unknown results, is a fundamental issue and is above all considerations.