Morocco plans to relax its exchange rate regime in 2026, resuming a gradual reform process that was interrupted by the pandemic, revealed Bank Al Mghrib’s governor Abdellatif Jouahri, in a statement to Bloomberg News.
During the annual meetings of the International Monetary Fund and World Bank in Washington, Jouahri announced that “the move would involve gradually shifting the dirham from its current peg, which is based on a basket of euros and US dollars.”
“The central bank is technically prepared,” stated the governor, adding that regulators are developing a plan for the transition. “We’ve also ensured that the banks are ready,” he noted.
For context, Morocco began gradually shifting toward a free float of its dirham in 2018; however, the process was hindered by slowing growth rates and the impact of the Covid-19 pandemic on tourism.
The kingdom has also faced challenges from increasing droughts, reduced support from Gulf Arab monarchies, and rising energy prices.
Jouahri stated that “future steps will lead to a currency determined by the market.” However, he emphasized that, for now, “more time and stewardship are needed for market participants, especially small businesses that account for the majority of the country’s output.”
The governor noted “that authorities are also considering issuing at least $1 billion in Eurobonds by early 2025.”
However, he suggested that Morocco may want to wait until early next year, pointing to “global uncertainties surrounding the US presidential election and the potential implications of the next administration’s Middle East policies.”
Jouahri revealed that the government also plans to establish a currency swap market next year as part of the kingdom’s strategy to introduce derivatives trading.
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