Developing An Early Warning System for Currency Crisis

‎ This study aimed at develop an early warning system for currency crisis in ‎Jordan, capable to predict and give an early warning about the probability of a crisis, the ‎study presented an early warning system for a currency crisis in Jordan, based on two ‎standard empirical methods of researching and forecasting a currency crisis: the signalling ‎method and the logit method. The finding showed that all leading indicators on average ‎sent signals within 6 to 24 months before the crisis, and there are four variables among the ‎leading indicators that were used in order to develop an early warning system showed ‎also a behavior and a precise description for the period preceding the currency crisis that ‎occurred in Jordan, and these variables were the sharp decline in international reserves, ‎the decline in the trade balance, increase the broad money supply (M2), and finally the ‎increase in the Dinar exchange rate.‎