Expected to be slow and gradual, the reform allowing the Moroccan dirham to switch from a fixed exchange rate to a flexible one was scheduled to be launched on July 1.
However, a week later, the government postponed sine die the launch of the reform, raising questions about its possible “abandonment.”
During the press conference following the quarterly meeting of Bank Al Maghrib’s Council held last week, Jouahri stressed that the Dirham liberalization reform would reinforce the “competitiveness of the Moroccan economy” and was highly supported by the International Monetary Fund.
The IMF reiterated its support to this reform in every single report and statement it issued this year.
The governor of Bank Al-Maghrib strove to make the process transparent in a way that enabled all economic stakeholders and public opinion to be informed of all its details. He recalled a number of assurances, such as the gradual transition to a more flexible exchange rate regime.
In a first step, the change would result in the widening of the dirham fluctuation band, but the basket and the weights (40 percent for the Dollar and 60 percent for the Euro) would remain unchanged.
BAM’s governor also ensure that the preparation of this reform was done in a “voluntary” way, unlike other countries like Egypt, which was in a situation of “currency crisis.”
According to Jouahri, “all the conditions are in place” to guarantee the success of this reform, one he deems necessary to accompany the Moroccan economic expansion in Africa and to make of Casablanca an essential financial hub.
Jouahri spoke at length about the postponement of Dirham exchange rate reform.
The governor of the Moroccan central bank revealed for the first time that July 1, the date advanced by the media, was indeed the one planned for the implementation of the reform.
“It was supposed to take effect on July 1, following a communication campaign with representatives of banks, employers, Moroccans living abroad, exchange offices and public bodies like OCP or MASEN,” Jouahri explained.
However, the reform took a blow when between May and June, trading rooms entered into a frenzy as commercial bank’s “speculations” against the dirham went wild. Worries about a devaluation prospect triggered a rush on currency, draining billions from the central bank’s foreign reserves.
The central bank found “high purchases of currency compared to the usual figures of foreign trade,” which amounted to nearly MAD 45 billion. Revealed for the first time by Jouahri, the amount is higher than the one announced at the time by the press.
“I am unhappy, because the credibility of the central bank is being questioned,” he said venting his frustration. The central bank boss, who openly accused the banks of speculating against the dirham at the time, reminded them of the rules of the Foreign Exchange Office regulations: “Only transactions backed by a foreign trade operation are accepted. Everything else is in principle forbidden even if some are tolerated.”
Following this unprecedented rush on currency, the head of the government decided to delay the reform of the exchange regime arguing that the Executive was barely established and he wanted to examine this reform in depth.
Five months after the botched launch of the reform, the file is not closed as the investigations conducted by the Exchange Office are not yet completed. But everything from Jouahri’s speech suggests that this is a simple postponement and that reform is still on the agenda.
As for the set date, Jouahri had one answer: “Go ask the government.”