Morocco will expand the band in which the dirham fluctuates from Monday to 5% either side of a reference price compared with 2.5% previously, the country’s finance ministry and central bank said on Friday.
The dirham is traded in a currency basket in which the euro has a 60% weight and the US dollar 40%.
The move marks the second step in a gradual currency reform process which started in January 2018 when the band was widened to 2.5% either side of the reference price from 0.3%.
“The second phase has been launched in a favourable domestic macroeconomic and financial context, marked, in particular, by an appropriate level of foreign exchange reserves, subdued inflation, a sustainable public debt and a sound financial sector,” finance ministry said in a statement. Widening the band will strengthen Morocco’s capacity to absorb external shocks and boost competitiveness, it said. Morocco’s economic growth is projected to rise from 2.4% in 2019 to 3.7 % 2020 and 4% in 2021, according to the International Monetary Fund.
Morocco’s foreign exchange reserves stood at 241bn dirhams at the end of February, enough to cover five months of imports, according to the central bank.