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Abu Dhabi, UAETuesday 11 December 2018

Morocco to launch more flexible exchange rate for dirham on Monday

Fluctuation range will be increased to 5 per cent to give greater shock protection

The Moroccan government is loosening its exchange rate system. Alvaro German Vilela / Alamy
The Moroccan government is loosening its exchange rate system. Alvaro German Vilela / Alamy

Morocco will introduce a more flexible exchange rate system for the dirham currency on Monday, the government said on Friday.

The fluctuation band in which the dirham is traded against hard currencies will be widened from 0.3 per cent either side of the previous day's close to 2.5 per cent either side, giving a 5 per cent range in total, the government said in a statement, confirming what sources had told Reuters earlier.

The move should give the Moroccan economy greater protection from external shocks, it added.

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Morocco has been working with a technical mission from the International Monetary Fund (IMF) to liberalise its currency. That move had been expected last year but got delayed pending further studies.

The Moroccan dirham is pegged most closely to the euro, but as a step towards greater flexibility the central bank has reduced the euro weighting of the exchange rate to 60 per cent from 80 per cent and raised the US dollar weighting to 40 per cent from 20 per cent.