Morocco Central Bank May Revise Currency Basket Weightings

Morocco’s central bank said it may revise its currency peg to reflect the weakening of the euro against the U.S. dollar.

The central bank is working with the finance ministry on the issue, Governor Abdellatif Jouahri told a news conference in Rabat after cutting the benchmark interest rate by a quarter of a percentage point to 2.5 percent. Morocco has a managed float exchange-rate system against a euro-dominated basket of currencies, according to the Economist Intelligence Unit.

“It may be time to revise our weighting,” Jouahri said yesterday, adding that Morocco’s international trade is equally divided between dollars and euros. The euro has weakened 9 percent versus the dollar in 2014, reaching a more-than two-year low of $1.2247 on Dec. 8.

Jouahri said Morocco’s economy is poised to recover next year, expanding 4.4 percent compared with an estimated level of 2.5 percent in 2014. The government will cut spending on subsidies to 33 billion dirhams ($3.7 billion) this year, below its 35 billion-dirham target set in the budget, he said.

The dirham depreciated for five months in a row since the end of June. It weakened 0.3 percent to 8.8479 per dollar as of 8:23 a.m. in Rabat, according to prices compiled by Bloomberg.

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