Hi Shayde78. This is a very typical example of Jordanian shibriya, and you are right, it is made for the local market around mid 20 c. or just a little earlier, which is for this type a good age.
There is no evidence it was made for anything but the local market and members of the Arab Legion carried very similar ones at the time. The coin impression is of king Ghazi of Iraq (see link http://www.chiefacoins.com/Database...ies/Ghazi_I.htm
In the picture taken in the 1940's you see a soldier with this type of dagger, but it is not a very clear one.
Summarized, a classical Jordanian piece that is not very valuable but authentic, and needs some love (restoration).