Morocco’s Currency Conundrum: Banks Halt Euro Purchases Amid Forex Flood

According to sources interviewed by Hespress, Moroccan banks are facing an unprecedented situation. Record inflows of foreign currencies, mainly in euros, have created a major imbalance. Between record remittances from Moroccans residing abroad, the recovery of tourism, and the increase in exports, Moroccan banking institutions find themselves unable to acquire the euro below the regulatory ceiling. As a result, they have simply stopped buying the European currency.

The problem stems from the Moroccan exchange rate system. Morocco applies a managed floating regime where the dirham can move by ±5% against a basket of currencies composed of 60% euros and 40% dollars. However, the euro has dangerously approached the lower threshold of this fluctuation band in recent weeks. Thus, banks can no longer buy the currency below a certain regulatory threshold, at the risk of reselling it at a loss.

The attitude of Bank Al-Maghrib surprises observers. Contrary to 2021 and 2022, when the central bank had intervened to massively repurchase the euro surpluses, this time it is content to monitor the situation without acting. The interbank market has even recorded several days without any transactions, awaiting a rise in the euro exchange rate.

The Governor of Bank Al-Maghrib, Abdellatif Jouahri, announced during the last Board of Directors meeting that the dirham will soon be detached from the euro-dollar basket. As of January 1, 2027, Morocco will adopt an inflation targeting system, where the dirham exchange rate will be freely determined by supply and demand. It should be recalled that Morocco has embarked on a transition from its fixed exchange rate regime to a more flexible regime, with the gradual widening of the fluctuation band, which went from ±0.3% to ±5% in March 2020.