Attijari Global Research (AGR) recommends that Corporates favour optional strategies to hedge the dirham against its main reference currencies.

In its "MAD Insights" report, AGR noted that the average volatility levels of MAD over 1 month, 2 months and 3 months, against the six main currencies have reached levels considered interesting by traders.

The dirham appreciated from November 16 to 20 against the dollar. Thus, the USD/MAD parity reached 9.12, approaching its annual low of 9.10 observed last September, a weekly performance of -0.26%. This development is explained by an improvement in the exchange rate position of the banks. It reached an annual high of 8.8 billion dirhams (MMDH) on Monday before returning, according to traders, to 8.4 billion dirhams at the end of the week.

Market liquidity improved markedly this week, widening the spread between the MAD reference price and its central price by 10 PBS, from 2.83% to 2.93% during the same period.

In addition, AGR anticipates a slight depreciation of the dirham by the end of the year due to a catch-up effect of import flows greater than that of exports. The EUR/MAD parity could thus cross the respective thresholds of 10.84, 10.88 and 10.93 at 1-month, 2-month and 3-month horizons, i.e. gains of 0.3%, 0.6% and 1.1% respectively over the three forecast horizons. Based on AGR estimates, the dirham is expected to return to the levels recorded in June 2020, i.e. a EUR/MAD parity close to 10.9.

The levels of depreciation of the MAD would be more sensitive against the dollar, continues the same source, noting that the USD/MAD parity should be up +0.8%, +1.1% and 1.6% respectively at 1 month, 2 month and 3 month horizons.

"Indeed, we note a gradual recovery of import operations in Morocco supported by the movement of appreciation of the dirham on the Q3-20. Under these conditions, the average USD/MAD parity should be around 9.26 within 3 months against 9.12 currently and compared to an annual high of 10.31 recorded last March, "estimates AGR.