- Stock market rise
- Exchange rate transition
- The challenges of transition
According to Bank Al-Maghrib (BAM), the Central Bank of Morocco, the Moroccan dirham appreciated by 1.4% against the euro and 0.6% against the US dollar during the first week of 2025 , confirming the stability of the country’s economy at the start of the year.
The Central Bank of Morocco did not record any foreign exchange auctions on the market during this period, which mainly contributed to maintaining the stability of its interventions.. Furthermore, as of January 3, Morocco’s foreign exchange reserves reached 373.2 billion dirhams, or $36.2 billion.
Although this figure represents a decrease of 0.6% from the previous week, reserves increased by 4.9% compared to the same period last year. Bank Al-Maghrib’s operations amounted to an average of 144.2 billion dirhams ($14 billion) per day thanks to various monetary operations.
In addition, BAM provided 60.2 billion dirhams ($5.8 billion) in seven-day advances, 49.6 billion dirhams ($4.8 billion) through repurchase agreements (repos ) and 34.3 billion dirhams ($3.3 billion) in guaranteed loans.
On the interbank market, daily trading volume averaged 2.6 billion dirhams ($252 million), while the exchange rate remained stable at 2.5 percent.
To support liquidity, the BAM injected 53.4 billion dirhams ($5.2 billion) in the form of seven-day advances during its January 8 call for tenders.
Stock market rise
The Casablanca Stock Exchange also started the year with a strong performance : the MASI index (Moroccan All Shares Index) increased by 6.4% during the first week of 2025.
This growth was driven by key sectors: banks grew by 6%, construction materials by 7.2%, transport services by 13.8% and real estate by 16.2%.
On the stock market, trading activity slowed slightly and total transactions decreased from 7.3 billion dirhams ($708 million) to 4.2 billion dirhams ($407 million). Additionally, most transactions took place on the central securities market, reflecting cautious but positive investor sentiment.
Exchange rate transition
It should be noted that Morocco is in an exchange rate transition phasesince it intends to move from the current system of pegging the dirham to the euro and the dollar (fixed exchange rate) to a floating exchange rate by 2026.
The floating exchange rate is a system in which the value of the currency is determined by supply and demand in the foreign exchange market, without direct intervention from the government or central bank to set it.
So, if investors have confidence in a country’s economy, demand increases and the value of the currency increases; on the other hand, if investor confidence declines, the value of the currency may also decline.
As part of this transition, Badr Bouarich, financial expert and former academic, identifies three key problems: inflation, foreign debt and currency volatility, each having long-term consequences on the country’s economy.
In 2023, Morocco imported around $12 billion in energy products and around $8.9 billion in food products, reflecting its dependence on external markets.
Relative to this and inflation, if the dirham weakens, it could significantly increase the cost of these imports, leading to higher consumer prices and affecting purchasing power. As a result, Bouarich warns that in the absence of specific safety nets, social inequalities will increase.
In addition, if the dirham were to depreciate, external debt, which stood at $69.2 billion at the end of 2023 (around 50% of Morocco’s GDP), could increase costs, weighing on public finances. and divert resources from essential development programs, according to the financial expert.
Regarding currency volatility, such episodes could deter foreign direct investment and disrupt trade in the short term. The inflow of such investments into Morocco in 2023 amounted to $2.5 billion, and financial institutions must therefore be prepared to counter potential speculative attacks against the dirham.
In order to meet these challenges, Morocco must adopt strategic measures to ensure economic stability while enjoying the benefits of a floating exchange rate.
For its part, the BAM will play an important role in the management of foreign exchange markets and will intervene if necessary, while tackling structural problems in order to avoid excessive fluctuations.
Bouarich also highlights the importance of encouraging companies, particularly in the energy or commodities sectors, to adopt hedging strategies, as these tools can protect companies from the negative effects of underlying asset volatility. underlying assets and exchange rates.
Furthermore, Implementing rules limiting traders’ profits in key sectors such as energy and food can help stabilize domestic markets and protect consumers against inflationary shocks.
So far, The start of 2025 shows strong market activity and strong financial indicators for Morocco, which constitutes a very positive outlook for the months to come.
