Dirham-Dollar-Euro exchange dynamics. Here are the potential impacts on Morocco’s foreign trade

The recent evolution of the exchange rate of the dirham against the dollar and the euro reflects complex global monetary and economic dynamics. The analysis of this dynamic reveals that since September 2024 the dirham is depreciated facing the dollar, passing from 9,6975 MAD/USD one september at a peak of 10,1114 MAD/USD one December, before appreciating slightly at 10,0589 MAD/USD one January 2025.

This depreciation, representing nearly 3,7%, is mainly explained by the sustained strengthening of the dollar. At the same time, the dirham is appreciated facing the euro, passing from 10,8482 MAD/EUR in September 2024 has 10,3516 MAD/EUR in January 2025.

The strength of the dollar in 2024 can be explained by the restrictive monetary policy of the FED, reflected by the evolution of the yield curve (yield curve), as well as increased foreign investment flows to the United States. Conversely, the euro has suffered from the economic challenges of the euro zone. Thus, the recent rate cut by the ECB, the promise of an imminent next rate cut and weak growth in Germany and France have weakened its position.

Impact on Morocco’s foreign trade

Morocco, deeply integrated into the world economy, would feel the contradictory effects of the devaluation of the euro and the appreciation of the dollar. In terms of imports, the majority of products imported by the Kingdom are intended for final consumption. Thus, the rise of the dollar increases the cost of products denominated in this currency, in particular energy raw materials and other essential inputs, thus increasing the bill for Moroccan imports from the dollar zone.

At the same time, Moroccan exports, mainly directed to the euro zone, find themselves in a paradoxical position. On the one hand, the weakness of the euro could make Moroccan products more expensive and therefore less competitive for European buyers. However, the strong dollar, by raising the cost of imports for euro zone countries, could offer a competitive advantage to Moroccan exporters. This could encourage European companies to turn to regional trading partners like Morocco, where trade is often denominated in euros, thus favoring Moroccan exports in certain sectors such as textiles.

A differentiated impact

Entered by Media24, and specialist in foreign exchange policies explains to us that the depreciation of the dirham against the dollar could considerably increase the import bill. “This depreciation makes our imports more expensive, given that almost 50% of our imports are denominated in dollars, notably agricultural and energy products. As for the euro, although half of our imports are also denominated in this currency, the appreciation of the dirham against the euro remains relatively weak and therefore does not play a significant compensatory role.”, he underlines .

On the export side, our interlocutor believes that the appreciation of the dirham against the euro constitutes a handicap, to the extent that the majority of Moroccan exports are intended for an area whose currency is the euro. However, he qualifies by explaining that the strong appreciation of the dollar against the euro could work in favor of Moroccan exporters. “Generally, the appreciation of the dirham against the euro should not penalize our exports, which could on the contrary be perceived as a competitive alternative by the European Union, particularly in a context where the dollar is very strong. In addition, Moroccan exports denominated in dollars could gain in competitiveness, which would give new impetus to our exports to areas where trade is denominated in dollars,” he explains.

Beware of diesel prices

Contacted by us, an importer company manager specializing in distribution in the health and food sectors shares a nuanced view on the impact of currency fluctuations, while expressing concerns about another key factor: diesel prices. For this business leader, any significant increase in the cost of fuel would constitute a threat to price stability.

“Our group imports from the dollar zone, and until now, we have not been directly impacted by the strength of the dollar on our operations. However, what really concerns us is the evolution of diesel prices A significant increase in the latter would be a disaster for us. It would directly impact logistics costs,” our source emphasizes.

In the same sense, it emphasizes the crucial role of logistics costs in the overall structure of the company’s expenses. “We must understand that transport is at the heart of our supply chain. When the price of diesel increases, it is not only the delivery of imported products that becomes more expensive. It also affects local distribution, which creates pressure on all of our costs,” she concludes.

A globally resilient textile sector

According to Amahzoune everyonepresident of the Moroccan Association of Textile and Clothing Industries (AMITH), the impact of fluctuations in the euro and dollar on this industry remains relatively limited. “The majority of Moroccan manufacturers operating in this field work as subcontractors, which allows them to benefit from a favorable situation when the dirham depreciates against these two currencies. Indeed, a relative decline in the dirham improves the competitiveness of Moroccan products on foreign markets, giving them an important competitive advantage. This situation is particularly beneficial for exporters, because it strengthens their position against their international competitors,” explains Mr. Amahzoune.

“However, this dynamic is not universal in the sector. A minority of players specializing in the production of finished goods, often dependent on imports for their inputs, are feeling the effects of the appreciation of the dollar more. “Importing costs can weigh on their margins and affect their profitability. Despite this, the textile sector as a whole appears resilient in the face of current fluctuations,” he adds.

In the same sense, according to an importer in the textile sector, the effect of a strong dollar varies depending on the nature of the activities of Moroccan manufacturers. “For exporters, the situation may turn out to be favorable. Indeed, a strong dollar makes imports of Asian products through Europe – Morocco’s main export market – more expensive. This means that Moroccan products, often invoiced in euros , become more competitive for European buyers In other words, a strong dollar acts, indirectly, as a competitive lever for Moroccan exporters in the euro zone. the impact is more nuanced,” he explains.

Thus, the expert notes that the cost of these inputs is “neutral”, in the sense that prices are aligned internationally, and that all of Morocco’s competitors face the same fluctuations. However, this neutrality depends on the degree of dependence of Moroccan manufacturers on inputs denominated in dollars, because a strong dollar can still weigh on costs for local companies.

“Morocco’s real competitive advantage lies in added value. Unlike other countries which invoice their products in dollars, Moroccan textile manufacturers generally invoice in euros, which mitigates the impact of currency fluctuations for their European customers. “When the dollar appreciates, Moroccan textile exporters benefit from a more advantageous positioning on European markets, where their products remain competitive compared to those of other international suppliers,” he concludes.