Title: What Is the Jordanian Dinar (JOD)? — A Practical Guide
Key takeaways
– The Jordanian dinar (ISO code JOD) is Jordan’s national currency; 1 JOD = 10 dirhams = 100 qirshes = 1,000 fils.
– Introduced in July 1950 (replacing the Palestinian pound); the Central Bank of Jordan (CBJ) has issued currency and run monetary policy since 1959.
– JOD has been pegged to the U.S. dollar since 1995 (fixed rate: 1 USD = 0.7090 JOD).
– The peg provides currency stability and helps attract investment, but it limits Jordan’s monetary-policy flexibility and exposes the economy to USD swings.
– Common banknote denominations: 1, 5, 10, 20, 50 dinars. JOD is accepted in parts of the West Bank.
Understanding the Jordanian dinar (JOD)
– History: The dinar replaced the Palestinian pound in July 1950 after Jordan’s independence. The Jordan Currency Board initially issued it; the Central Bank of Jordan assumed this role in 1959.
– Denominations and design: Banknotes currently in circulation include 1, 5, 10, 20, and 50 dinar notes. Coins and banknotes carry the name Hashemite Kingdom of Jordan; coin inscriptions were shifted to English in 1992.
– Geographical use: Mainly used within Jordan; dinars also circulate on Israel’s West Bank.
– Relative value: JOD is among the world’s highest-valued currencies on a unit basis (often listed in top-tier rankings).
Why JOD is pegged to the U.S. dollar
– Primary aim: stability. Pegging to the USD reduces exchange-rate volatility, making trade, borrowing and investment more predictable.
– Result: predictable pricing for imports, better confidence for foreign investors and depositors, and relative price stability for domestic financial institutions.
– Trade-offs: the CBJ cannot freely devalue or revalue the dinar to respond to domestic shocks without managing reserves or changing the peg policy. Changes in USD strength (based on U.S. economic conditions) pass through to Jordanian purchasing power even if Jordan’s local economy differs.
JOD to USD peg (current practical info)
– Fixed rate used by CBJ: 1 USD = 0.7090 JOD (that means 1 JOD ≈ 1.410 USD).
– Example calculation: Converting $1,000 to JOD at the pegged rate: 1,000 USD × 0.7090 = 709.0 JOD.
– Because the peg is fixed, this exchange rate is essentially stable over time; however, actual conversion amounts you receive can vary due to bank/agent spreads, fees, and commissions.
Is the Jordanian dinar strong?
– Measured in unit value and stability, JOD is “strong” because of the USD peg. That strength primarily reflects the peg arrangement rather than necessarily reflecting superior macroeconomic fundamentals. Strength here means the currency retains value relative to other currencies because it tracks the USD.
Why is the JOD relatively “expensive”?
– A “high” unit value (i.e., more USD per unit of currency) stems from the peg and policy choices, not a straightforward measure of national wealth. Jordan keeps a tight, managed exchange-rate regime that prevents large depreciations; the peg together with monetary and fiscal policies support the dinar’s high unit value.
How to calculate JOD exchange rates (practical steps)
1. Use the fixed peg formula:
– JOD = USD × 0.7090
– USD = JOD ÷ 0.7090
2. For conversions involving other currencies:
– Convert currency A → USD (use live market rate), then USD → JOD using the peg (multiply by 0.7090).
– Or get direct market cross-rates from reliable currency converters (XE, OANDA, Reuters) which often combine live FX quotes with the fixed USD–JOD parity.
3. Account for transaction costs:
– Banks, money exchangers and remittance services add spreads and fees. Always check the offered rate and any commissions before completing a transaction.
Practical steps for different users
For travelers to Jordan
– Bring USD or widely accepted major cards; ATMs dispense JOD in-country.
– Best practice: withdraw JOD at an ATM in Jordan (watch foreign withdrawal fees), or change USD at banks/exchangers after arrival for better rates than airport kiosks.
– Keep small denominational notes and coins for taxis and small purchases.
For businesses (importers, exporters, small businesses)
– Pricing: consider quoting contracts in USD to avoid exchange rate ambiguity, or clearly state JOD prices and how adjustments will be handled if the peg policy changes.
– Cash management: maintain USD reserves to support JOD liquidity needs given the peg; expect import costs to move with USD price changes.
– Hedging: although the peg reduces FX volatility with USD, exposure to other currencies may require hedging via forwards or FX swaps.
For remitters and investors
– Cross-border transfers: use banks or licensed remittance services; compare effective exchange rates after fees. Example: $1,000 sent to Jordan should convert to roughly 709 JOD before fees.
– Investing: JOD-denominated instruments are effectively exposed to USD risk due to the peg; evaluate how a stronger/weaker USD affects real returns.
Special considerations and risks
– Policy constraints: CBJ cannot freely adjust monetary policy to respond to domestic shocks without affecting the peg.
– USD exposure: Because of the peg, JOD imports USD’s volatility — U.S. macro policy and movements in the USD directly influence Jordan’s external purchasing power.
– Economic context: Jordan’s economy faces structural challenges, including slow growth and regional instability, factors that affect fiscal sustainability and reserve adequacy (reserves are needed to defend the peg).
– Practical conversion costs: official peg doesn’t eliminate bank/money-changer spreads and service fees — these affect the amount you receive.
The bottom line
The Jordanian dinar (JOD) is Jordan’s stable, high-valued currency, backed by a long-standing peg to the U.S. dollar (1 USD = 0.7090 JOD). The peg supports financial stability, helps attract investment, and reduces exchange-rate volatility, but it limits monetary flexibility and transmits USD movements to Jordan’s economy. For travelers, companies, and remitters, the peg makes JOD conversions predictable in theory — in practice, always account for fees and market spreads.
Sources and further reading
– Investopedia: “Jordanian Dinar (JOD)” (source overview used for this article)
– Central Bank of Jordan — official information about currency and monetary policy
– XE.com — live currency conversion and reference for USD↔JOD rate
– UPI — historical reporting on Jordan’s peg decision
– Statista — Jordan GDP series and macro context
(Accessed Dec. 23, 2021 for original materials cited)
If you’d like, I can:
– Convert a specific USD amount to JOD (including estimated fees based on typical bank spreads), or
– Walk through practical hedging strategies for a business with USD and JOD exposures. Which would be most helpful?