Relationship between Macroeconomic Indicators and Currency Crisis: A Case Study in Jordan

Abstract

The present study aimed to explore the relationship between macroeconomic indicators and currency crisis during the period (1999-2013) in Jordan. The targeted macroeconomic indicators are: (gross domestic product, inflation rate (IR), money supply (M2), current account to GDP rate, internal public debt to total public debt rate, &external public debt to total public debtrate).  The dimensions of currency crisis are:(the real exchange rate, and the foreign exchange reserves).It was found that macroeconomic indicators don’t have a statistically significant impact on the currency crisis measured by (real exchange rate). It was found that macroeconomic indicators have a statistically significant impact on the currency crisis measured by (the foreign exchange reserves).  The researchers of the present study recommend increasing the extent of cooperation and collaboration between the Central Bank, the Ministry of Finance, and the Ministry of Planning & International Cooperation in Jordan. They recommend establishing an agency for anticipating financial crises. Such an agency should collect and analyse data and information about financial and economic indicators.