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.¿