When we think of currency, the first currency that comes to mind is the Dollar or Pound. The Dollar is the most traded currency all across the globe. Most people believe it has the highest value because of higher trading, but this isn’t true. Though the U.S Dollar is the most popular currency, it is not the strongest one.
Many strong currencies in the world dominate the currency market scene. Some of them are – Jordanian Dinar and Kuwait Dinar. Asian countries other than Europe do not share the currency, and each country has its currency value.
The value of a currency hinges on the economy. Many online forex services let you evaluate different currencies. Higher the economic growth, the higher the value of the currency. Let us see how the Jordanian Dinar is the most expensive currency and maintains its top 5.
The currency value of the Jordanian Dinar
The key to how the Jordanian Dinar maintains its currency value lies in how the country maintains a fixed exchange rate. The Dinar is typically pegged to special drawing rights of the IMF, and most people aren’t aware of this.
In a practical scenario, Jordanian currency is pegged to the U.S Dollar at the rate of 0.709. Due to this reason, the exchange rates of Dinar remain constant. Floating exchange rates cause a considerable change in the value of the currency. Some may expect it to be too high and some too low.
When the value does not change, it maintains stability, which makes it so powerful. The local banks in Jordan attract deposits due to stability in the value. The banks can’t affect the value of the currency in the open market.
The higher value of the currency is not dependent on the demand and supply situation of the country. It is the result of tighter Govt policies that don’t change according to economic conditions. Other countries change their policies, which leads to floating exchange rates of the currencies that affect their market value. That said, it is a sign of the capabilities of the Jordan government.
Fixed exchange rates require a constant effort that affects the market. Jordan is one country with one of the freest economies in the Arab world, which could be a possible reason for its stability. Moreover, Jordon does not depend on a single economic sector, which makes it self-reliant.
Other 3 Currencies performing well than Jordanian Dinar:-
1. Kuwaiti Dinar
It is the most valued and the highest currency in the world, which has maintained its spot in the top 5 currencies of the world for a long time. Being first on the global scale, the value of the currency is more than the U.S Dollar. Kuwait covers a small area of land compared to reserves, and it can produce natural resources in abundance.
The value of the Kuwaiti Dinar is equal to 3.46 against the U.S Dollars. The country has more than five different currencies, and the latest one was introduced last year. Also, the economy of Kuwait is heavily dependent on oil exports; the place has one of the largest global reserves in the world. With a high demand for oil from all over the world, the currency value increases. There are no taxes applicable to the currency, which also makes a difference.
2. Omani Rial
Omani Rial is rated third in the list of top currencies of the world. Not only Asia, but Omani Rial has a higher value all over the world. Oman has maintained the value of its currency for over five decades. The main reason for its stability is the relationship between Oman and the USA.
Since the year1986, the value of the Rial has not changed, and it is between 2.6 USD. To maintain its position in the top currencies, it retains a portion of reserve in the U.S dollar. The biggest reason for its higher value is the oil prices.
The county is one of the world’s leading oil producers, and therefore its currency pegs at a much higher value. The stable supply of oil to the USA and the rest of the world strength its economy and helps maintain its set face value.
3. Bahraini Dinar
Bahraini Dinar has managed to take a top spot in the strongest currencies of the world. The value of the currency has now reached 2.65 U.S Dollars. It is the most powerful currency of Asia according to the current value. The currency was first introduced in 1965, and since it has maintained its position in the currency chart, it has only increased with time.
As its one of the freest economies of the Middle East, the value does not change with the country’s trading practices. Petroleum is the driving force behind the economy, which makes up for more than 60% of the country’s exports.
The oil reserves may be limited in size, but that does not affect the currency’s value. The diversification of the economy has led to better prospects, and it stands in a good position than other Gulf countries.
Many factors affect the value of the currency. If there is no stability in the exchange rate or fluctuations in the economy, it will affect the exchange rate. For the proper stability, the government needs to concentrate on factors like – economic conditions, inflation, and interest rates of the bank.
The rising value of the currency is because of the stimulated growth of the economy. When there is an improvement in the trade balance, it affects the currency value. With the new introduction of policies in the country, there may be a change in its value. The Jordanian Dinar has managed to maintain its position because of its stability in the international market. With the efforts of the Govt, the value has increased with time. With uncertainty in the market conditions due to the Covid19 pandemic, it is not easy to maintain the position. But Jordan has managed to do it with its continuous effort.
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