Journal Issue

Statement by the Staff Representative on Morocco, January 19, 2018

International Monetary Fund. Middle East and Central Asia Dept.
Published Date:
March 2018
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1. This statement provides information that has become available since the issuance of the staff report on January 8, 2017. This information does not change the main thrust of the staff appraisal.

2. On January 12, 2018, the authorities announced that greater exchange rate flexibility would be introduced on January 15, 2018. They indicated that, as of January 15, the dirham fluctuation band would be widened to +/-2.5 percent (from the previous 0.3 percent) around a reference parity still determined by the central bank based on a basket comprising the euro and US dollar (with weights of 60 and 40 percent, respectively). This change is in line with the announcement by the Head of Government in July 2017. The authorities noted that it was initiated under favorable conditions and would be supported by continued structural reform implementation going forward.

3. Currency markets were calm in Morocco on January 15 and 16. Market activity was limited. The dirham remained close to the central parity, well within its new range. To date, news reports indicate that analysts neither observe nor foresee large reactions by market participants to the regime change.

4. The transition to a more flexible exchange rate arrangement will benefit Morocco’s economy, as highlighted in the staff appraisal. This reform will allow the economy to better absorb shocks and preserve its competitiveness. It also illustrates the strength of the authorities’ reform commitment, and will bring about a further improvement to Morocco’s monetary policy framework. Finally, it is a positive signal for investors, as it confirms the prospect of Morocco maintaining a strong and sustainable external position by the end of the current PLL arrangement and over the medium term.

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