Morocco Aims to Loosen Currency Peg to Euro-Dollar in 2026

Morocco aims to loosen the kingdom’s exchange rate regime in 2026, returning to a gradual reform process that was halted during the pandemic, the central bank governor said in an interview.

The step will consist of gradually moving the dirham away from its current peg, which is now a basket of Euros and US dollars, Abdellatif Jouahri told Bloomberg News in Washington, where he’s attending the annual meetings of the International Monetary Fund and World Bank.

“The central bank is technically ready” and regulators are working on a plan for the move, according to the governor. “We also got the banks all ready,” he added. 

Free float

The North African nation started a gradual shift toward a free float of its dirham in 2018, but the process was stalled by slowing growth rates and the tourism hit from the Covid-19 pandemic. Morocco has also been struggling with more frequent droughts, dwindling support from Gulf Arab monarchies and a rise in energy prices.

Jouahri said later steps will lead to a market-determined currency. But, he added, for now more time and “stewardship” was needed for market participants, particularly small firms that are the bulk of the country’s output.

Authorities are also considering issuing at least $1 billion in eurobonds by early 2025, the governor said. Morocco should probably wait until early next year, he added, citing global uncertainty over the US presidential election and the next administration’s Middle East policies. 

The government also aims to develop a currency swap market next year as part of the kingdom’s plans to launch derivatives trading, Jouahri said.