History of the exchange rate regime


Since the 1970s, Morocco has adopted a fixed exchange rate regime, tying the dirham to a basket of currencies reflecting the structure of national trade with the rest of the world. This regime has ensured the stability of the dirham in terms of nominal effective exchange rate and mitigated the fluctuations of its constituent currencies. Several adjustments have been made to the constituents of the basket since its adoption, always aiming to reflecting the changes occurring in Morocco's trade structure over this period. The most recent change, made on April 13, 2015, was based on Morocco's international trade structure, bringing the weight of the euro to 60 percent and the US dollar to 40 percent, against respectively 80 percent and 20 percent previously.

This fixed exchange rate regime has also helped preserve macroeconomic stability in a tough environment, particularly in terms of inflation control, which remained below 2 percent over the past ten years. It has also provided the economy with a nominal anchor, the exchange rate in this case, which, together with the strengthening of the Central Bank's independence in setting monetary policy since 2006, played a major role for a rigorous and credible monetary policy.
However, a fixed exchange rate regime enables to cover all the foreign currency needs of operators without limit, which could generate strong pressure on the foreign exchange reserves and possibly alter Bank Al-Maghrib's ability to fulfill its external commitments.

Since 2010, the Moroccan authorities have been reflecting on the reform of the exchange rate regime and in 2016, it was decided to embark on the process of making the exchange rate more flexible, in parallel with the adaptation of the monetary policy framework to inflation targeting. The main motivations behind this reform are, on the one hand, to accompany the openness policy of the Moroccan economy and strengthen its resilience to external shocks and, on the other, to contribute to the promotion of the economy’s competitiveness and of the place of Morocco's as a leading financial hub on the African continent and finally to reduce the pressure on foreign exchange reserves.

On January 15, 2018, Morocco initiated a voluntary and gradual transition from a fixed to a more flexible exchange rate regime, by launching the first phase of the reform, which resulted in a widening of the dirham's fluctuation band from ±0.3% to ±2.5% in relation to a central rate set on the basis of the current reference basket, which is composed of the euro (EUR) and the U.S. dollar (USD) up to 60% and 40% respectively.

This reform, which is a lengthy process, must constantly comply with prerequisites, particularly in terms of sound macroeconomic fundamentals, adequacy of the foreign exchange reserves’ level, robustness and resilience of the banking system, and finally the adaptation of the monetary policy framework to inflation targeting.

In this regard, and in order to carry out this reform successfully, the authorities have been assisted by international institutions such as the IMF and certain central banks by way of sharing their experience and expertise.

For the operational implementation of this strategic project, a roadmap was developed describing the various strategic, analytical, operational and regulatory aspects of the reform as well as the monetary policy framework.

Bank Al-Maghrib also initiated awareness-raising actions for economic and banking operators to prepare for the transition and to help them fully grasp the risks associated with the flexibilization of the exchange rate, particularly aspects related to hedging against foreign exchange risk.

On March 9, 2020, the monetary authorities decided to continue the process of reforming the exchange rate regime initiated in January 2018, by widening for the second time the fluctuation band of the dirham from ±2.5% to ±5% in relation to a central rate set by Bank Al-Maghrib on the basis of a basket of currencies composed of the euro (EUR) and the U.S. dollar (USD) up to 60% and 40% respectively.

The second phase of the reform begun after all the objectives of the first stage have been achieved, namely the increase of foreign currency liquidity on the domestic foreign exchange market and the appropriation by economic operators of the concept of foreign exchange risk.

The economic conditions and macroeconomic fundamentals as well as the adequate level of foreign exchange reserves are favorable prerequisites for a successful gradual and orderly transition to adapt the current exchange rate regime.

For an optimal viewing of this website's pages, we recommend using the newest versions of the browsers: