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Morocco aims for flexible currency system in early 2017

Morocco would work with a technical mission from the IMF during the second half of this year as part of introducing the currency move

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Morocco is aiming to introduce a flexible exchange rate system in the early part of 2017, its central bank governor said on Sunday.

“We are considering the move currently from fixed exchange rate to a flexible exchange rate,” Abdellatif Jouahri told reporters on the sidelines of an Arab finance minister’s event.

Jouahri said the country would work with a technical mission from the International Monetary Fund during the second half of this year as part of introducing the currency move.

He did not give details of the new system, but the IMF has identified “introducing greater exchange rate flexibility” as an important step which it said would increase the ability of Morocco’s economy to absorb shocks and diversify.

The Moroccan dirham is mostly pegged to the euro but as a step towards greater flexibility, in April last year the central bank reduced the euro’s weighting in the currency basket to 60 percent from 80 percent, while raising the US dollar’s weighting to 40 percent from 20 percent.

Last December, Jouahri told Reuters that Morocco would start targeting inflation along with its adoption of a more flexible exchange rate system.