|Euro in Jordan, another beat to the dollar
|"The Central Bank must change most of the reserves in Jordan to the euro in view of increasing interest rates on the euro in the near future."|
The launching of Europe's united currency, the euro, is still to stir public enthusiasm in local markets. Although money exchangers agree it is early yet, they claim the circulation of the euro in Jordan is timid.
Jordanians who have business links with Europe, especially university students and businessmen, are the main customers for the euro. "The Euro's presence in local markets is still far from the required levels," said Hani Al Soudi, a financial expert and money exchanger. He added, however, since it came into use on 1 January, the number of those wanting the currency is increasing.
For Adnan Hamad, another money exchanger in downtown Amman, the euro is slowly making its presence.
He stressed the currency's value in the local financial market has increased by 25 percent over the past three weeks. "The euro has become the most demanded currency among those who travel to Europe and have businesses there. It now comes second behind the dollar in terms of purchasing power and ahead of the pound sterling," Hamad told The Star.
"I can tell there is a strong desire among Jordanians to change their reserves from the dollar to the euro. And I can confidently predict that more than half of the current dollar-based reserves in Jordan will be changed to the euro by the end of this year."
He pointed out before the euro was made legal tender in Europe, the German mark and French franc were the most in demand in local markets due to strong business ties between Jordan and Europe. "Hence, with the euro combining12 European currencies, I believe it will make business deals and trade in Europe much more powerful over the coming years."
Al Soudi, meanwhile, thinks the euro will be the most powerful tender in world markets in 2 to 3 years time. He reiterated his call for the government to reconsider its decision to link the dinar with US dollar. "There must be a basket of currencies attached to the dinar, where the dinar will benefit much from the financial stability of world markets," Al Soudi continued.
Besides the dollar, the basket would include the euro, sterling pound and Japanese yen. Over recent months, the US dollar showed rapid fluctuations in world markets and was affected by developments in the US, especially after the 11 September attacks on New York and Washington.
"The Central Bank must change most of the reserves in Jordan to the euro in view of increasing interest rates on the euro in the near future," explained Al Soudi, adding the euro's exchange rate will raise dramatically in the coming three years.
"We need to fortify the Jordanian dinar's competence in local and international markets. This can only be attained through streamlining financial policy to make financial reserves and the dinar, in particular, maintain a steadfast position for Jordan's long-term financial policies."
The Star redaction