AMMAN: Jordan raised its overnight rate on dinar deposits yesterday by 75 basis points to 4 percent, acting to bolster the currency and guard against capital flight at a time of domestic unrest.
It was the third time the Central Bank of Jordan has raised the deposit rate this year as it seeks to encourage investments in dinar-denominated assets. The bank said it also raised its one week repo rate, by 50 basis points to 4.25 percent.
Bankers said transfers of dinar assets into dollars have increased following nationwide protests last month after the government ended fuel subsidies, pushing through steep price hikes to keep a lid on a budget deficit that has widened to $3bn.
The lifting of the subsidies was a condition for a $2bn standby loan from the IMF, improving chances of foreign donor support for the ailing economy.
Reuters
