Flexibility of the Dirham : Morocco is not comparable to Egypt and Turkey

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				Flexibilité du Dirham  : Le Maroc n'est pas comparable à l'Egypte et à la Turquie
			At the approach to the transition of Morocco to the flexible exchange rate regime, a number of economic operators evoke the pessimistic scenarios of Turkey and Egypt, to illustrate the risks that can weigh on the Kingdom during its migration scheduled for the second half of 2017.

These two countries had experienced an impairment loss sudden of their currency, with catastrophic consequences on their economy. Compared to them, the Morocco, which has chosen to prepare its transition, has several prerequisites solid, allowing it to migrate in a manner serene and prepared. Indeed, far from a transition that could be described as a gradual and controlled manner, Turkey and Egypt-are seen to impose a floating exchange rate system due to the fragility of their economic situation. For Morocco, this change of system is a
voluntary approach. Another finding that emerges : the macroeconomic framework, morocco is deemed to be resilient, particularly at the level of foreign exchange reserves and inflation, which should play into his favor. In detail, the level of foreign exchange reserves currently available in Morocco displays a “Ara Metric (an indicator assessing the stock of currency of a country according to its needs in the short term) between 100% and 150%, a level considered comfortable by the standards of the IMF. This will provide some comfort in the short term in Morocco at the time of the change of
plan, and will form a mattress of safety in the event of exogenous shocks. By contrast, Egypt and Turkey had a “Ara Metric”, respectively, 50% and 68% at the time of the change of regime, the level of reserves is very low, which, among others, was behind the “chaos” post-fixed exchange rate regime. The second element of robust macroeconomic that makes the difference in the case of morocco, is inflation. When the flexibility of the exchange rate has been inset into the systems of Turkish and egyptian, these two countries had high inflation (in excess of 30% for the case of Turkish and
of the order of 23% for the case of egypt). Conversely, Morocco, and for many years maintains a low inflation rate below 2%. It therefore seems better prepared to absorb the inflationary pressures that it may suffer. In addition, the exchange control regulations, which only allows for a partial opening of the accounts in the capital, including those held by residents, the weakness of investments in the capital markets to speculative principles, and the parallel market of currencies where the exchange rates remain in phase with those in the formal market because of its competitiveness, are all elements that attest to the robustness of the system to exchange moroccan before its migration.

By Y. Seddik

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