Rabat – One month after Morocco introduced a flexible exchange rate system, the Moroccan dirham appreciated by 0.3 percent against the euro and fell by 0.59 percent against the dollar, according to the latest weekly indicators of the week from February 1 to 7, published Saturday by Bank Al Maghrib (BAM).
The Central Bank’s indicators for this week also show that net international reserves are set at MAD 239.2 billion, which slightly decreased by 0.4% compared to the previous week, but with a 4.1 percent decline on a year-over-year basis.
During this period, Bank Al-Maghrib injected MAD 43 billion in 7-day advances through a call for tenders and granted MAD 3.4 billion to the support program for the financing of the SMEs, the Moroccan central bank said.
On the interbank market, the weighted average rate was 2.25 percent, while the volume of trade returned from MAD 5.3 billion to 3.8 billion, BAM said. Bank Al-Maghrib injected an amount of MAD 44 million in the call for tenders for 7-day advances on February 7 (value date of February 8), notes the bank.
On January 15, Morocco’s Ministry of Economy and Finance officially widened the band in which the Moroccan dirham trades against a basket of currencies, 60 percent for the euro and 40 percent for the dollar, from ±0.3 percent to ±2.5 percent. Over a timeframe of 10 to 15 years, the ministry explained that it will move towards a free floating currency.
According to BMI Research, a Fitch Group firm that provides macroeconomic, industry and financial market analysis, Morocco’s new reform is “unlikely to prompt a sharp currency sell-off, limiting near-term risks to growth and inflation.”
The group also pointed out that this move is “likely to help the country in its efforts to attract greater investment to the kingdom and diversify trade, while the risks of disorderly depreciation are well contained given the country’s robust financial buffers.”