Morocco’s Dirham Faces Mild FX Headwinds Amid Robust Reserve Buildup to MAD 429 Billion

Moroccan foreign exchange dynamics | central bank liquidity measures | emerging market reserve buffers | equity market momentum

Bank Al-Maghrib’s latest weekly bulletin signals contained depreciation pressures on the Moroccan dirham, with a 0.5% softening against the euro and 0.8% versus the US dollar over the October 16–22 tracking window—calibrated moves that underscore the currency’s resilience in a volatile global FX landscape, offering global fixed-income managers a measured entry into North African carry trades.

Absence of foreign exchange interventions during the period highlights BAM’s disciplined approach to reserve preservation, with official FX holdings climbing to MAD 429.4 billion as of October 17—a 2.1% weekly gain and 17.9% year-over-year expansion.

This fortified buffer, equivalent to over 8 months of import cover, bolsters Morocco’s external vulnerability profile, enhancing appeal for sovereign debt and currency-hedged EM equity strategies amid geopolitical flux.

Monetary operations maintained steady liquidity infusion, averaging MAD 152.8 billion daily: comprising MAD 75.9 billion in seven-day advances, MAD 43.5 billion in long-term repos, and MAD 33.4 billion in guaranteed loans.

The interbank rate held firm at 2.25%, underpinned by average daily volumes of MAD 4.7 billion, reflecting normalized funding conditions that support corporate borrowing costs and sustain credit growth for portfolio-relevant sectors.

Complementing these macro stabilizers, the Casablanca Stock Exchange extended its bullish run, with the MASI index surging 6.9% to notch a year-to-date return of 31.7%—one of EM’s top performers. Sectoral leadership from banks (+8.6%), transport services (+9.0%), and real estate (+13.1%) signals broad-based conviction in Morocco’s infrastructure and financial intermediation themes, presenting tactical overweight opportunities for diversified global mandates as valuations remain compelling relative to regional peers.

For institutional allocators, this confluence of FX steadiness, reserve strength, and equity vigor reaffirms Morocco’s stature as a low-beta EM anchor, with BAM’s prudent toolkit mitigating downside risks while the 2026 fiscal blueprint—targeting a sub-3% deficit—further cements yield attractiveness across asset classes.