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Moroccan dirham
Moroccan dirham
Moroccan dirham
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Moroccan dirham
الدرهم المغربي (Arabic)
ISO 4217
CodeMAD (numeric: 504)
Subunit0.01
Unit
SymbolDH‎
Denominations
Subunit
 1⁄20rial (informal)
 1⁄100santim (official)
franc (informal)
Plural
 santim (official)
franc (informal)		santimat
Banknotes20, 50, 100, 200 dirhams
Coins10, 20 santimat, ½, 1, 2, 5 & 10 dirhams
 Rarely used1 santim, 5 santimat
Demographics
ReplacedMoroccan franc
User(s) Morocco
Issuance
Central bankBank Al-Maghrib (Bank of Morocco)
 Websitewww.bkam.ma
Valuation
Inflation0.2%
 SourceThe World Factbook, 2019 est.
Pegged with60% EUR and 40% USD[1]

The Moroccan dirham (Arabic: درهم, romanized: dirham, Moroccan Arabic: درهم, romanized: derhem; sign: DH; code: MAD) is the official monetary currency of Morocco. It is issued by the Bank Al-Maghrib, the central bank of Morocco. One Moroccan dirham is subdivided into 100 santimat (singular: santim; Arabic: سنتيم).

The exchange rate of the Moroccan dirham is determined within a band of fluctuation of ± 5 percent compared to a central rate established by the central bank of Morocco on the basis of a currency basket composed of the euro and United States dollar by up to 60% and 40% respectively.[2][3]

As of 2025 the Moroccan Dirham is still not freely convertible on world financial markets. The full integration of the Moroccan economy into the world market is hindered by the underdeveloped Moroccan currency system.[4]

History

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The word dirham derives from the Greek currency, the drachma. The Idrissid dirham, a silver coin, was minted in Morocco under the Idrisid dynasty from the 8th to 10th centuries.[5]

Before the introduction of a modern coinage in 1882, Morocco issued copper coins denominated in falus, silver coins denominated in dirham, and gold coins denominated in benduqi. From 1882, the dirham became a subdivision of the Moroccan rial, with 500 Mazunas = 10 dirham = 1 rial.

When most of Morocco became a French protectorate in 1912 it switched to the Moroccan franc. The dirham was reintroduced on 16 October 1960.[6] It replaced the franc as the major unit of currency but, until 1974, the franc continued to circulate, with 1 dirham = 100 francs. In 1974, the centime replaced the franc.[7]

In 2015, the Central Bank updated the weights of the peg to 60% for the euro and 40% for the US dollar, against respectively 80% and 20% previously, to better reflect the current structure of foreign trade of the country.[8]

On 24 November 2023, along with a wide variety of coinage, Bank Al-Maghrib unveiled a new series of banknotes and coins, which included a 100 dirham banknote.[9]

Coins

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In 1960, silver 1 dirham coins were introduced. These were followed by nickel 1 dirham and silver 5 dirham coins in 1965. In 1974, with the introduction of the santim, a new coinage was introduced in denominations of 1, 5, 10, 20 and 50 santimat and the 1 and 5 dirham coins. The 1 santim coins were aluminium, the 5 up to 20 santimat were minted in brass, with the highest three denominations in cupro-nickel. New cupro-nickel 5 dirham coins were added in 1980 and changed to a bi-metal coin in 1987. The bi-metal coins bear two year designations for the issue date—1987 in the Gregorian calendar and the 1407 in the Islamic calendar.

The 1 santim was only minted until 1987 when new designs were introduced, with a 1⁄2 dirham replacing the 50 santimat without changing the size or composition. The new 5 dirham coin was bimetallic, as was the 10 dirham coin introduced in 1995. Cupro-nickel 2 dirham coins were introduced in 2002. In 2012, a new series of coins has been issued, with the 5 and 10 dirham coin utilizing a latent image as a security feature.[citation needed]

In 2023, a new series of coins were issued for circulation in Morocco, with the same denominations issued.

2012 Dirham Coins[10]
Value Technical parameters Description
Diameter Mass Composition Edge Obverse Reverse
10 santimat 20 mm 3 g Nordic gold
89% copper
5% aluminium
5% zinc
1% tin 		Reeded Arms of the Kingdom and inscription "Kingdom of Morocco" Saffron flower and bee
20 santimat 23 mm 4 g Reeded Lotus flower and design representing Earth
1⁄2 dirham 21 mm 4 g Cupronickel
75% copper
25% nickel 		Reeded Arms of the Kingdom and inscription "Kingdom of Morocco" Design representing fish in the ocean
1 dirham 24 mm 6 g Reeded Mohammed VI Arms of the Kingdom and inscription "Kingdom of Morocco"
5 dirhams 25 mm 7.5 g Ring: Cupronickel (as 1 dirham)
Center: 70% Cu 24.5% Zn 5.5% Ni 		Segmented reeding Mohammed VI Hassan II mosque, with security feature
10 dirhams 28 mm 12 g Ring: Aluminium bronze (as 5 santimat)
Center: Cupronickel (as 1 dirham) 		Reeded with Stars Inscription Mohammed VI (earlier issues show Hassan II) Boumalne Dades, with security feature
For table standards, see the coin specification table.

Banknotes

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Popular denominations are words widely used in Morocco to refer to different values of the currency; they are not considered official by the state. Those include the rial (Arabic pronunciation: [rjal]), equivalent to 5 santimat, and the franc [frˤɑnk], equivalent to 1 santim. Usually, when dealing with goods with a value lower than a dirham, it is common to use the rial or santim. For very high priced goods, such as cars, it is normal to refer to the price in santimat. However, rial is used when speaking in Arabic and centime when speaking in French.

Though not used by the young generation, the denomination 1,000, 2,000, up to 100,000 francs will be used by people who lived during the French colonial period when referring to 10, 20 and 1,000 dirham.[citation needed] Likewise, the rial is also used for higher value goods than portions of the dirham, reaching 5,000 dhs (100,000 rial). This denomination is used in a Moroccan Arabic speaking context.

The Moroccan dirham is also accepted in trade markets in Ceuta, although the euro is the sole legal tender there.[22]

Current MAD exchange rates
From Google Finance: AUD CAD CHF CNY EUR GBP HKD JPY USD
From Yahoo! Finance: AUD CAD CHF CNY EUR GBP HKD JPY USD
From XE.com: AUD CAD CHF CNY EUR GBP HKD JPY USD
From OANDA: AUD CAD CHF CNY EUR GBP HKD JPY USD

See also

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Notes

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References

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Revisions and contributorsEdit on WikipediaRead on Wikipedia

Moroccan dirham

View on Grokipedia
from Grokipedia
The Moroccan (: درهم مغربي; French: dirham marocain) is the official currency of the Kingdom of , subdivided into 100 centimes and issued exclusively by , the country's central bank. Reintroduced in 1960 following Morocco's independence from the French protectorate, it replaced the Moroccan at a rate of 1 equaling 100 francs, restoring a monetary unit with historical roots in the Islamic . Since the , the has operated under a fixed , pegged to a basket of currencies weighted by Morocco's trade partners, primarily the and U.S. , to maintain stability amid external pressures. Banknotes and coins feature portraits of reigning monarchs, such as King Mohammed VI, and motifs symbolizing Moroccan heritage, including the and cultural landmarks, with denominations ranging from 20 to 200 s for notes and 1 to 10 s for common coins. The remains non-convertible outside due to capital controls, limiting its use in international transactions and underscoring the central bank's focus on domestic monetary sovereignty.

History

Pre-independence currencies

Prior to the establishment of the protectorates, Morocco's currency system relied on traditional coins including falus, silver dirhams, and gold benduqis, which lacked standardization and facilitated trade deficits and depreciation. In 1881, Sultan Moulay Hassan I introduced the Hassani rial to modernize the monetary framework and curb foreign coin dominance, subdividing it as 1 rial = 10 dirhams = 500 mazunas. This silver-based rial circulated until 1921, equivalent initially to about 5 French francs, though its value fluctuated amid economic pressures from European trade imbalances. The French Protectorate, established by the on March 30, 1912, covering most of , initially permitted dual circulation of the rial and French francs to ease transition, but this led to confusion and prompted reforms. The Moroccan franc was introduced in 1921 under French administration, pegged 1:1 to the metropolitan and subdivided into 100 centimes, with coins and banknotes issued by the State Bank of Morocco (Banque d'État du Maroc). French-minted coins bearing Moroccan inscriptions circulated from 1921 to 1956, while banknotes in denominations such as 5, 10, 20, 50, 100, 500, and 1000 francs were produced starting in 1917–1922, often alongside metropolitan French notes. In the Spanish Protectorate, established November 27, 1912, in northern including (until 1956), the served as the primary currency, subdivided into 100 céntimos, reflecting Spain's colonial monetary policy without a distinct Moroccan variant. Peseta coins and notes circulated alongside limited local issues, maintaining separation from the French zone's system until unification efforts post-World War II. During the war, Allied military currencies, including British and American occupation notes, briefly supplemented francs and pesetas in liberated areas, though their use waned by 1945 as protectorate currencies stabilized. The and peseta persisted through on March 2, 1956, underscoring delayed monetary sovereignty amid ongoing French and Spanish influence.

Establishment in 1960

The Moroccan was reintroduced as the national on 16 1960, replacing the Moroccan at an exchange rate of 1 equaling 100 francs, thereby symbolizing Morocco's assertion of monetary in the wake of from French protectorate rule in 1956. The unit was subdivided into 100 santimat, or centimes, aligning with the decimal structure of the preceding while reviving a pre-colonial name derived from the ancient silver coinage. This transition facilitated a smooth replacement of colonial-era , with the 's adoption formalized through decrees enabling rapid issuance to support economic stabilization. Bank Al-Maghrib, Morocco's established in 1959 as the successor to the Banque d'État du Maroc, assumed responsibility for issuing and regulating the dirham, marking a pivotal step in centralizing control over free from foreign influence. The bank's initial output included overprinted banknotes on existing franc denominations: 50-dirham notes adapted from 5,000-franc bills and 100-dirham notes from 10,000-franc bills, providing immediate high-value circulation during the phase-out of francs. These provisional measures were supplemented by new series of 5- and 10-dirham banknotes issued under Decree No. 2-60-153 dated 28 March 1960, featuring designs emphasizing national symbols and printed to meet everyday transactional needs. Complementing the banknotes, the first dirham coins entered circulation in 1960, including silver 1-dirham pieces minted to commemorate the currency's revival and bearing the portrait of King Mohammed V, underscoring the monarchy's role in post-independence . This issuance of coins in reflected an intent to instill confidence in the new currency's intrinsic value amid the transition, while smaller denominations in base metals followed to facilitate minor transactions. The overall rollout prioritized accessibility, with coordinating the exchange process to minimize disruptions, thereby embedding the dirham as a of Morocco's economic .

Post-independence reforms and redenominations

In 1974, introduced a new series of coins denominated in santimat—the Berber term for the dirham's subunits, equivalent to 100 per —to address the need for smaller transaction values amid economic pressures including from global oil shocks and domestic agricultural shortfalls. These included 1 santimat pieces, aluminium-bronze 5, 10, and 20 santimat coins, and cupro-nickel 50 santimat, 1 , and 5 coins, replacing or supplementing earlier issues that had become less practical for everyday use. Subsequent coin reforms in the late 1980s and 1990s emphasized durability and security against counterfeiting. Cupro-nickel 5 coins, initially issued in 1980, transitioned to bimetallic composition in 1987 (dated both 1987 Gregorian and 1407 Islamic), combining a center ring with a nickel-brass outer ring to enhance resistance to wear and . A bimetallic 10 coin followed in 1995, similarly structured for longevity in high-circulation environments. Banknote updates during the and incorporated advanced security elements like holograms, , and improved substrates to deter counterfeiting, aligning with broader monetary modernization efforts. For instance, the 1991 series 10 notes were phased out by 2016 as newer designs circulated. These material and design evolutions supported the 's role in Morocco's fixed , pegged to a since the to preserve nominal stability against trade partners' fluctuations. No major redenominations removing zeros occurred, as Morocco avoided through fiscal restraint and the pegged system, though periodic denomination adjustments—like introducing higher-value coins—facilitated adaptation to evolving transaction volumes without disrupting restrictions.

Design and characteristics

The Moroccan dirham (MAD) is identified by the ISO 4217 alphabetic code MAD and numeric code 504. Its official symbol consists of the Arabic abbreviation د.م., while the Latin equivalent DH is commonly used in international and commercial contexts. One dirham subdivides into 100 smaller units called santimat (plural) or santim (singular), historically referred to as centimes in French-influenced nomenclature. These subunits appear on low-denomination coins, facilitating precise transactions in everyday commerce. As the official currency issued by , the holds unlimited status throughout , obligating acceptance for all public and private debts denominated in it. It circulates de facto in under Moroccan administration, though not formally designated as there. Export and import of dirham notes and coins are restricted by law to prevent , limiting its role beyond approved cross-border payments.

Exchange rate regime and convertibility restrictions

The Moroccan dirham maintains a managed floating exchange rate regime, pegged to a currency basket weighted approximately 60% toward the euro and 40% toward the US dollar, reflecting the composition of Morocco's external trade. This framework, established in the 1970s to anchor stability amid volatile commodity exports and import dependencies, allows the dirham to fluctuate within a ±2.5% band around a central parity rate set by Bank Al-Maghrib. In January 2018, the regime transitioned from a narrower ±0.3% band to this wider flexibility, enabling gradual adjustments to external shocks while curbing speculative pressures, though full floating remains deferred, with further loosening targeted for 2026. The Office des Changes enforces these parameters through daily interventions and monitoring, prioritizing reserve preservation over unfettered market determination, which differentiates the dirham from freely floating currencies like major reserve assets. Historical precedents underscore this caution: during the 1980s economic crises marked by fiscal deficits exceeding 10% of GDP, external imbalances, and dirham overvaluation from 1970s , multiple devaluations—totaling around 20-30% cumulatively between 1980-1985—were implemented under IMF-supported programs to restore competitiveness and rebuild foreign reserves depleted by food and energy imports. These steps, including phased real depreciations, facilitated structural adjustments but highlighted the regime's vulnerability to price swings and debt servicing, informing ongoing band-based management. Convertibility remains restricted, particularly on the , where outflows require prior approval to prevent and safeguard reserves, rendering the dirham non-freely internationally. Current account transactions, such as trade payments, benefit from since the 1980s, with imports up to MAD 200,000 now eligible for advance without case-by-case scrutiny, yet tourists and residents face export caps—typically requiring declaration for amounts exceeding modest thresholds—to curb and parallel market distortions. These controls, while easing for inward investments via dedicated dirham accounts, sustain a premium in unofficial exchanges, estimated at 5-10% above official rates in border areas, as evidenced by persistent activity despite regulatory updates like the 2024 foreign investment . Such measures balance macroeconomic stability against full openness, prioritizing causal links between exchange policy and reserve adequacy over pressures from global bodies.

Denominations

Current coins

The current circulating coins of the Moroccan dirham include denominations of 10, 20, and 50 santimat, produced in aluminum-bronze , and 1, 2, 5, and 10 dirham coins, typically composed of nickel-plated for lower values and bimetallic constructions for higher denominations to enhance durability and security. These coins are issued by and remain without specified withdrawal dates for the active series. In November 2023, released a new series of circulating coins, maintaining existing denominations but updating designs to incorporate modern security features, including edge lettering on dirham coins to deter counterfeiting and facilitate automated vending compatibility amid gradual adjustments. The smaller santimat coins, valued at fractions of the (1 dirham = 100 santimat), continue to support low-value transactions, though their usage has declined with rising prices. Obverses generally bear the royal insignia or portrait elements of King Mohammed VI, while reverses depict national symbols such as the , the , or interlaced motifs representing Moroccan heritage. The 5 and 10 dirham coins, being bimetallic with a or center ringed by or , feature reeded or inscribed edges for tactile identification and fraud prevention. These specifications ensure compatibility with modern payment systems while preserving cultural .
DenominationMaterialCommon Security Feature
10 santimatAluminum-bronzePlain edge
20 santimatAluminum-bronzePlain or reeded edge
50 santimatNickel-plated steelReeded edge
1 dirhamNickel-plated steelInscribed edge
2 dirhamNickel-brassInscribed edge
5 dirhamBimetallic (brass/nickel)Segmented reeding
10 dirhamBimetallic (bronze/nickel)Edge lettering

Current banknotes

The circulating banknotes of the Moroccan dirham consist of 20, 50, 100, and 200 dirham denominations from the 2023 series issued by . These notes replaced earlier series and feature portraits of King Mohammed VI on the obverse, alongside elements symbolizing Moroccan such as architectural motifs and royal insignia. Security enhancements in the 2023 series include intaglio printing for tactile identification, color-shifting magnetic inks, three-windowed security threads, and holographic stripes that display the denomination and royal crown under varying light angles. The 100 note, first issued on 24 2023, measures 144 by 70 mm, with a of the king's and the value "100," and obverse designs incorporating a traditional Moroccan and a SPARK feature shifting from green to gold on the crown. Its reverse emphasizes the cultural heritage, socio-economic development, and African openness of the Moroccan . The 20 dirham note highlights Morocco's architectural heritage, while the 50 dirham note, introduced into circulation in 2024, and the 200 dirham note, the highest denomination featuring advanced printing like Rapid HD substrate, follow similar design principles with enhanced durability and anti-counterfeiting measures. All notes use polymer-like substrates in select production for longevity, though primarily cotton-based paper with embedded fibers for verification.

Historical denominations and withdrawals

The first banknotes denominated in dirhams were overprints applied to pre-existing Moroccan notes, comprising 50-dirham overprints on 5,000- notes and 100-dirham overprints on 10,000- notes, introduced following the dirham's establishment in 1960. These served as transitional instruments during the shift from the system. Subsequent original dirham banknote series included 5- and 10- notes of the 1960 type (issued under No. 2-60-153 of 28 March 1960), 50- notes of the 1965 type ( No. 933-65 of 15 December 1965), and 5-, 10-, 50-, and 100- notes of the 1970 type ( No. 2-70-573 of 8 October 1970). Low-denomination paper notes were progressively replaced by coins for durability and efficiency, with 5- notes supplanted by coins in 1980 and 10- notes by coins in 1995. All banknotes from the 1960, 1965, and 1970 series ceased to be on 1 April 1998, pursuant to No. 2-97-965 of January 1998 and No. 2-03-547 of 8 August 2003; they remained exchangeable at branches until 31 December 2011. Among coins, early silver issues were withdrawn from circulation, including 1-dirham coins of the 1960 type ( No. 2-60-726 of 30 August 1960) and 1965 type ( No. 2-65-114 of 30 March 1965), as well as 5-dirham silver coins of the 1975 type ( No. 2-75-360 of 17 July 1975). These demonetizations reflected shifts toward base-metal compositions and updated designs to reduce production costs and enhance everyday usability.

Usage

In everyday transactions within , small-denomination coins such as 5 and 10 dirham pieces see high circulation, particularly in informal markets (souks), like petit , and street vending where exact change is preferred to facilitate quick exchanges. These coins are essential for petty commerce and daily purchases, reflecting the cash-centric nature of Morocco's , where over 70% of transactions remain in physical despite regulatory pushes for digital alternatives. Banknotes of 50 and 100 dirhams are popular for slightly larger everyday expenditures, such as groceries or short-haul fares, due to their portability and acceptance in urban and semi-urban settings. Cash maintains dominance in rural areas, where banking infrastructure is limited and mobile network coverage, while improving, does not fully supplant traditional payment habits; here, small change is routinely demanded for agricultural markets and local services. Urban centers show a gradual shift toward mobile payments, with platforms like those from enabling transfers, yet cash persists for its immediacy and trust factor in interpersonal dealings—75% of consumers reported using at least one digital method in , but cash-on-delivery remains prevalent even in . Tipping customs further underscore the need for small denominations, as gratuities of 5-20 dirhams in coins or low-value notes are customary for porters, drivers, and service staff, often rounded up from fares or bills to the nearest convenient amount; this practice favors coins and 20-dirham notes to avoid the hassle of breaking larger bills in informal contexts. Vending and informal sector dynamics similarly prioritize accessible small change, minimizing transaction friction in a culture where haggling and immediate settlement are norms.

Usage in disputed territories

The Moroccan dirham serves as the official currency in the Moroccan-administered portions of , which Morocco incorporated following the of November 6, 1975, and subsequently designated as its southern provinces. This usage extends to economic activities such as phosphate mining and , the territory's primary revenue sources, facilitating monetary integration under Moroccan administration. In the limited areas controlled by the , including parts of the eastern desert and refugee camps in , the dirham circulates alongside the , , and occasionally the , reflecting cross-border influences and limited infrastructure. The , proclaimed by Polisario in 1976, designates the as its currency, with commemorative coins issued since 1992, but it lacks practical circulation and remains symbolic rather than functional. This multiplicity of currencies hinders formal trade and contributes to informal exchanges across frontlines, underscoring the territorial dispute's impact on monetary uniformity.

International restrictions and black market dynamics

The Moroccan dirham is subject to stringent international transfer restrictions, reflecting its non-convertible status for transactions and partial limitations on current account operations. Moroccan customs authorities enforce a limit of 1,000 dirhams on the of national in form, with non-residents required to declare foreign currency equivalents exceeding 100,000 dirhams upon entry to enable potential re-export. The U.S. Department of State specifies that of dirhams is prohibited, compelling tourists to exchange surplus holdings before departure to avoid confiscation. These measures, maintained by the Office des Changes, aim to preserve but hinder seamless global circulation. Tourists frequently face practical barriers, including ATM withdrawal caps of 2,000 to 5,000 dirhams per session and suboptimal exchange rates at airports and border points, where spreads can exceed those at urban banks. Such constraints foster informal parallel exchanges in tourist hubs, where individuals may obtain dirhams at rates deviating from official benchmarks, though participation risks fines or legal penalties under regulations. Black market dynamics intensify around diaspora remittances, which reached 117.7 billion dirhams in 2024 and constitute over 8% of GDP. Informal networks, leveraging trust-based intermediaries, enable rapid conversion of foreign cash into dirhams, circumventing official channels' fees, documentation, and hurdles for non-resident accounts. These systems process transfers outside formal banking, often at lower costs but with opacity that invites regulatory scrutiny; in January 2025, authorities probed networks handling migrant cash inflows for illicit trading and risks. While official remittances grew modestly to 9.45 billion dirhams in January 2025, persists for its speed in serving Morocco's five million expatriates.

Economic role and policy

Relation to Moroccan monetary policy

Bank Al-Maghrib, Morocco's , implements primarily through the dirham to achieve , its statutory core objective. The key policy rate, maintained at 2.25% as of September 25, 2025, serves as the principal tool for steering short-term interest rates and overall liquidity in the . Reserve requirements, adjusted to 0% since 2020, complement this by influencing banks' lending capacity and credit expansion. These instruments enable targeted interventions in the money market, including operations, to align rates with policy goals. The framework supports a transition toward formal , with ongoing preparations emphasizing forecasts of inflation risks from domestic demand, external shocks, and commodity prices. Recent inflation has stabilized near 2%, allowing to ease rates while monitoring urban consumer price indices for sustained low levels. This approach prioritizes empirical indicators over rigid bands, focusing on medium-term stability amid Morocco's managed . Monetary policy coordinates with fiscal strategies to underpin Morocco's New Development Model, launched in 2021 to drive through private investment and enhancement. This synergy has contributed to inflation containment around 2.5% post-reforms, balancing expansionary fiscal measures with central bank tightening to avoid overheating. Bank Al-Maghrib's management further aids this by buffering inflows from exports like phosphates, ensuring dirham stability without excessive liquidity surges.

Impact on trade and inflation

The Moroccan dirham's peg to a weighted 60% toward the and 40% toward the U.S. has supported competitiveness by providing stability, particularly with the , Morocco's primary trading partner. This stability has facilitated growth in key sectors such as automobiles, where Morocco became the largest exporter to the EU in 2023, surpassing and , with automotive exports reaching records like 44 billion dirhams in early 2023. , contributing nearly 15% to GDP, also benefits from predictable pricing for exports like and to , though vulnerability to domestic droughts tempers overall gains. However, the peg exposes Morocco to imported from basket currencies, notably through imports that constitute 90% of its needs and fluctuate with global prices tied to euro-denominated contracts. import bills, while declining to projected levels like 94.4 billion dirhams in 2026, previously contributed to spikes exceeding 10% year-over-year in mid-2023 before easing to 0.3% by August 2025 amid resolved supply shocks and adjustments. is forecasted at 2.1% by end-2025, with core measures dropping to 1.1%, reflecting moderated imported pressures but ongoing risks from energy volatility. The dirham's regime has coincided with persistent trade deficits, narrowing to 286 billion dirhams (7.3% contraction) in 2023 due to lower imports and recovery surpassing pre-pandemic levels, yet widening 3.2% to 196.85 billion dirhams by August and projected at 19.8% of GDP in 2025. receipts and remittances have offset deficits, shrinking the current account to 0.6% of GDP in 2023, but expected widening above 2% through 2028 underscores structural reliance amid post-COVID service gains. Foreign reserves, covering 5.5 months of as of January 2025, provide a buffer exceeding six months in some assessments, yet the heavy euro weighting heightens vulnerability to shocks like divergences or recessions impacting demand for Moroccan goods.

Central bank oversight

Bank Al-Maghrib, Morocco's central bank, was established on July 30, 1959, as the successor to the State Bank of Morocco, assuming responsibility for monetary issuance and financial stability in the kingdom. Its governance structure includes a appointed by royal decree, with the institution operating under statutes that grant financial autonomy but subject it to oversight by the King, who receives the annual economic report directly from the , underscoring limits on operational independence in a monarchical system. The bank's core powers encompass the exclusive right to issue banknotes and coins as throughout , alongside prudential supervision of the banking sector, which includes enacting standards, conducting off-site and on-site inspections, and overseeing more than 20 credit institutions, such as commercial banks and finance companies. As the supervisory authority for anti-money laundering and counter-terrorism financing, enforces compliance through internal due diligence requirements, risk management frameworks, and regulatory updates aligned with national laws like Law No. 43-05. It has also initiated explorations into digital currencies, launching a pilot for the e-Dirham, a retail , to assess its potential for enhancing payment efficiency while maintaining monetary control. Audits and balance sheet disclosures highlight Bank Al-Maghrib's reserve management, with total assets reaching approximately 533 billion MAD as of March 2025, comprising significant holdings in (over 370 billion MAD) and investments, reflecting prudent liquidity buffers equivalent to several months of imports. This asset base supports dirham stability amid supervision duties, though royal consultations on key reports indicate ongoing alignment with national priorities over full autonomy.

Recent developments and reforms

Exchange rate fluctuations since 2023

The Moroccan dirham depreciated against the US dollar during much of 2023 and , amid the US Federal Reserve's hikes that bolstered the dollar globally, with weekly shifts often ranging from 0.5% to 1%. For example, the USD/MAD rate averaged around 9.9 in early 2023 before climbing toward 10 or higher in stretches of , reflecting broader currency pressures. This depreciation was partially offset by gains against the in late , where the dirham appreciated 0.8% from to . As of the latest available data, 1 Euro (EUR) is equivalent to approximately 10.79 Moroccan Dirham (MAD); exchange rates fluctuate, so check a live source for the most current rate. In 2025, the initially strengthened against the USD, gaining 1.3% in July amid stabilizing global conditions and domestic reserve accumulation. expanded to 406.88 billion MAD by June, equivalent to over five months of import cover, supporting intervention capacity by . However, by mid-October 2025, the weakened approximately 0.6% against the USD over the prior week, with the USD/MAD rate fluctuating from 9.16 on October 19 to 9.27 on October 23. These movements were influenced by domestic factors, including recurrent droughts that reduced agricultural GDP contributions by up to 7% cumulatively since 2023, slowing overall growth to 3.2% in and exerting downward pressure on export competitiveness. Despite this, non-agricultural sectors provided resilience, limiting broader depreciation.

Planned transition to flexible exchange rate by 2026

In October 2024, Governor Abdellatif Jouahri announced the resumption of gradual exchange rate reforms for the Moroccan dirham in 2026, following an interruption caused by the that had paused progress since 2020. The initiative seeks to expand the dirham's fluctuation band beyond its current ±2.5% limit relative to a central rate tied to a (60% and 40% U.S. ), fostering a transition toward greater market-driven flexibility. Preparatory measures include phased capital account liberalization to allow controlled increases in foreign investment flows and convertibility for current account transactions, building on prior widenings of the band from ±0.3% in 2017 to ±2.5% by 2018. This aligns with recommendations under Morocco's Flexible Credit Line and Resilience and Sustainability Facility arrangements, which emphasize bolstering reserves—reaching approximately $36 billion by mid-2024—and refining inflation-targeting tools to mitigate transition risks. The shift is projected to introduce short-term volatility as influence the dirham's value more directly, potentially pressuring import costs amid Morocco's deficit. However, proponents, including , argue it will enable long-term resilience by allowing the currency to adjust to productivity differentials and external shocks, such as commodity price swings, rather than relying on interventions within rigid bands.

Challenges and criticisms

Stability issues and pegging debates

The Moroccan dirham has been pegged to a basket of currencies, weighted 60% toward the and 40% toward the US dollar, since the 1970s, with the regime evolving to a managed peg within narrow bands (±0.3% or less) to maintain nominal effective stability and mitigate external shocks. This arrangement has contributed to historically low volatility, with annual consumer price increases averaging around 2% in recent years prior to global disruptions, supporting price predictability in a trade-dependent . However, the peg's rigidity has constrained automatic adjustments to domestic shocks, such as the severe 2022 drought that reduced agricultural output by 17.3% and slowed overall GDP growth to 1.1%, exacerbating import reliance without allowing dirham depreciation to bolster competitiveness or ease imported pressures. Proponents of the peg emphasize its role in fostering predictability for key sectors like and exports, which constitute significant inflows, by anchoring expectations and reducing transaction costs in with and the . This stability has been bolstered by foreign reserves reaching approximately $37.1 billion in , equivalent to over five months of import cover, providing a buffer against short-term pressures. Critics, however, argue that the fixed regime has led to periodic overvaluation of the dirham, as evidenced by econometric analyses identifying misalignment phases from 1998 to 2017 driven by and external factors, which harm non-traditional export sectors by eroding price competitiveness. Sustainability concerns arise from Morocco's public debt ratio, stabilizing at around 70% of GDP in 2023-2024, which limits fiscal flexibility to support reserve defenses amid to recurrent droughts and commodity price swings. The peg restricts independent , forcing reliance on alignment with basket currencies and capital controls, potentially amplifying external imbalances during asymmetric shocks, as noted in IMF assessments of the regime's constraints on short-run management. Debates persist on whether gradual flexibilization could enhance resilience without unleashing volatility, though empirical evidence from misalignment studies underscores the trade-offs between imported stability and endogenous adjustment capacity.

Economic criticisms and counterfeiting risks

The strict exchange controls on the Moroccan dirham have drawn criticism for fostering economic inefficiencies, including reduced and hampered export growth due to the currency's managed peg to a basket of euros and dollars, which keeps the dirham artificially strong against trading partners. Economists argue this regime limits flexibility, contributing to persistent by undermining competitiveness in labor-intensive sectors like and textiles, with rates hovering at 13.3% overall and exceeding 35% among as of 2023. These controls indirectly exacerbate living costs through reliance on costly imports and suppressed domestic productivity gains, fueling public discontent manifested in protests over affordability amid job scarcity, though direct causation remains debated among analysts favoring market-oriented reforms. While proponents of the peg credit it with averting balance-of-payments crises during shocks like droughts or global commodity spikes, detractors, including those advocating faster , contend it delays essential adjustments to external pressures and perpetuates behaviors that stifle innovation and dynamism. Market-liberal perspectives emphasize that transitioning to greater flexibility could enhance growth by aligning exchange rates with fundamentals, potentially reducing through boosted exports, though risks of short-term from a depreciating loom large. Counterfeiting poses a persistent but contained threat to the dirham's integrity, with reporting 9,575 fake banknotes detected in 2019 and authorities seizing over MAD 13 million in counterfeits nationwide in 2017, a 19% rise from the prior year, primarily in urban hubs like . High-denomination notes such as the 100-dirham bill have been targeted in isolated rings, prompting enhancements like advanced holograms and substrates in recent series, alongside partnerships with firms to integrate anti-forgery technologies. These risks intersect with broader financial vulnerabilities, including surges in involving employee and suspicious loans totaling millions of dirhams, which undermine public trust in currency oversight despite vigilance.

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