Morocco’s Central Bank Reports Success in Dirham Exchange Rate Flexibility

"Given a favorable market effect, the dirham ended the year up 5.6% against the US dollar and 2% against the euro," the central bank said in its report, noting a certain stability in the value of the national currency during the period.

BAM also notes an increase in the volume of transactions on the interbank compartment of 74.7% to 754 billion dirhams (MMDH) and a decrease of 10% to 258 MMDH in the use of hedging instruments, induced by a drop in international energy prices.

Since January 2018, Morocco has embarked on a process of exchange rate regime flexibilization. A first step was the widening of the dirham fluctuation band from ±0.3% to ±2.5% against the euro (EUR) and the US dollar (USD), at 60% and 40% respectively.

After this first successful step, marked by an increase in foreign exchange liquidity in the foreign exchange market, a second widening of the dirham fluctuation band from ±2.5% to ±5% was carried out in March 2020.