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BAM: Morocco’s Dirham Edges Higher Against US Dollar

Rabat – Morocco’s national currency, the Moroccan Dirham consolidated by 0.20% against the US dollar (USD) between January 19, and 25, according to data from Morocco’s Central Bank, Bank Al-Maghrib (BAM)

The drop is not due to the rise in the value of the Moroccan dirham, it rather reflects the drop in the value of USD, as the USD Currency Index continued to slide between January 19, and 25. 

However, as of January 26, the USD gained traction amid new market optimism. A slowdown in inflation data prompted a rise in the USD as well as stock value as investors became optimistic that the US central bank, the Federal Reserve, succeeded in engineering a soft landing – slowing down demand to lower inflation and avert the scenario of a recession. 

The US Federal Reserve, much like central banks around the world including in Morocco, adopted an aggressive monetary policy throughout 2022. In December 2022, central bank interest rates rose to 4.5% in the US, their highest level in 15 years. 

Higher central bank interest rates mean that loans will become more expensive for consumers, leading to slower demand, and lower inflation.

Morocco’s central bank equally tightened its monetary policy in 2022, raising interest rates reaching their highest levels in 14 years to 2.5%.

While the US is apparently already reaping the benefits of tighter monetary policies, experts generally agree that such measures can take up to two years to show any tangible results. 

Meanwhile, data in Morocco shows that consumer spending is already dropping, which is a trend that predates BAM’s decision to raise interest rates. And echoing the drop in consumer spending is people’s confidence in the prospects of an economic recovery. 

Source: Morocco World News

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Ayham Abecassis

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