Casablanca - Moroccan Bank Al-Maghrib has announced that it will not rush into the liberalization of the Moroccan dirham, although the International Monetary Fund has encouraged the initiative.
Casablanca – Moroccan Bank Al-Maghrib has announced that it will not rush into the liberalization of the Moroccan dirham, although the International Monetary Fund has encouraged the initiative.
Floating the Moroccan dirham was expected to take place at the beginning of 2017, as announced by Bank Al-Maghrib earlier. However, the bank has announced that it will now wait until mid-2017.
A floating exchange rate means that the value of a currency is not fixed and subject to state regulations and restrictions, but rather it is set by the currency market. Therefore, the value of a currency based on a floating exchange rate rises and falls in accordance with the supply and demand.
Bank Al-Maghrib President Abdellatif Jouahri, , who attended a meeting Wednesday in Rabat to consider decisions related to controlling Morocco’s monetary policies , said that although Morocco is ready to float the Moroccan dirham beginning in January 2017, the operation will be delayed until the second half of 2017. The delay stems from the Bank’s concern that more meetings should take place in order to secure the operation and guarantee its success.
According to the Arabic-language news source, Hespress, Jouahri wishes to assure that the liberalization of the dirham does not come into effect until all the hypotheses are ready and all the key players are prepared. For this reason the bank will resume its meetings with parties such as the General Confederation of Moroccan Companies (CGEM), banks, as well as conduct other regional meetings.
The President of Bank Al-Maghrib pointed out that the liberalization of the Dirham is contingent on three main elements: the need to preserve a strong balance sheet, the existence of a strong banking system, and the availability of positive currency reserves.
Egypt’s experience in floating the Egyptian pound was not positive and not a good model, especially because the currency lost half of its value immediately after the exchange rate converted to floating. The pound has continued to decline systematically, as the US dollar has continued to rise, reaching 20 Egyptian pounds to the U.S. dollar just yesterday.
Jouahri explained that the Egyptian experience should not be compared to what Morocco is set to undertake, noting that the policy will take different phases. In contrast to Egypt’s situation, he said, “We will adopt a deliberate policy of liberalizing the dirham and it is possible to set conditions in this regard. Therefore one should not compare things that are not comparable.”