From currency collapse to the 1995 dollar peg

Jordan's exchange-rate chart looks essentially flat from the mid-1990s onward, but that stability followed a currency crisis that nearly halved the dinar's value. Heavy external borrowing through the 1980s, falling remittances, and a sudden halt in Gulf aid pushed Jordan into a balance-of-payments crisis in 1988-89; the dinar was forced to float and lost close to half its value against the dollar within about a year, prompting Jordan's first IMF-supported adjustment program in 1989. The 1990-91 Gulf War then added a second shock, as hundreds of thousands of Jordanian and Palestinian expatriates were expelled from Kuwait and other Gulf states and returned home almost overnight, straining housing, public services, and the balance of payments just as trade with Iraq collapsed under UN sanctions. After several more years of IMF-backed stabilization and fiscal consolidation, the Central Bank of Jordan re-pegged the dinar to the US dollar in October 1995 at 0.709 dinars per dollar, a rate it has defended ever since through interest-rate policy and reserve management, turning what had been a decade of currency volatility into the flattest line on the country's long-run charts.