The government of Morocco does not intend to move to a new phase of local currency flotation, according to the Moroccan Central Bank.
“Morocco will not move to another phase of flotation, until the necessary conditions are met,” said Abdellatif Al-Jawahiri, the governor of the Moroccan Central Bank.
Al-Jawahiri did not disclose the nature of the conditions that must be met in order to resume floating the local currency.
Morocco began floating its domestic currency in January 2018. The country allowed the dirham exchange rate to move by a margin of 2.5%, up or down, against the euro and the US dollar.
The decision is the first stage for the full float over a period of 10 years.
On March 9, 2020, Morocco began implementing the second phase of flotation, expanding the margin of movement to 5%, up or down.
“Morocco rejects the position of the International Monetary Fund, which urged accelerating the flotation of the exchange rate of the dirham, and moving towards direct flotation,” Al-Jawahiri said.
He added, “we are the ones who will decide when we will implement the new phase of flotation, not the International Monetary Fund”.
In a report issued on January 24, 2019, IMF experts recommended that the Moroccan authorities should not delay expanding the scope of the flotation.
Earlier on Tuesday, the Moroccan Central Bank decided to keep the main interest rate unchanged at 1.5%. The decision came to mitigate the repercussions of the pandemic on the economy.
World Bank loan
In another context, in early June, the World Bank gave the green light to grant Morocco a loan of $450 million. The bank said it aims at enhancing access to financial and digital services.
The World Bank indicated that the loan is the second for financing development policies for financial and digital inclusion, in a series of three loans.
All are aimed at expanding the provision of financial services and digital infrastructure to individuals and business institutions, the bank said.
“The coronavirus crisis has had a disproportionate impact on the most vulnerable and needy groups, including women, youth, informal workers and smaller businesses,” said Jesko Hentschel, World Bank Director for the Maghreb and Malta.