Rabat – The value of the US Dollar continues to hike compared to the Moroccan Dirham, with $1 reaching MAD 9.91 today.
On Monday, the US Dollar reached its highest value over the past 16 months, with the potential to go even higher as the United State’s central bank, the Federal Reserve moves to increase interest rates to tame inflation.
America’s Federal Reserve announced plans to increase interest rate in late 2021, a default measure to control inflation that’s bordering 8%, four times the recommended 2%.
As markets brace for hiking interest rates, demand on the greenback is breaking its two-year record.
But inflation is not just a problem in the US. Governments around the world are moving to increase interest rates to limit the flow of currencies in the market and protect national currencies against devaluation.
With governments having spent more on healthcare amid the COVID-19 health crisis, experts have noted that soaring international inflation rates are primarily due to increased government spendings.
Governments-issued relief funds to support purchasing power coinciding with global reduction in production capacity have also aggravated inflation, other experts have pointed out.
According to some estimates, the US government has pumped up to $6 trillion to stimulate the economy. The funds include unemployment relief funds, on vaccine development research, and small business among other schemes.
In Morocco, despite COVID-induced rising in government spending, the Moroccan central bank, BAM, has maintained inflation well below 2%. BAM has notably benchmarked interest rates at 1.5% since 2020, reflecting effective macro-economic policy.
While inflation is well under control in Morocco, external factors are pushing grain, gas and oil prices higher, weighing down on Morocco’s trade balance while the government ramps up efforts to subsidize commodities.
Read Also: US Dollar-MAD Exchange Rate At Two-Year Record High
