The dirham (MAD) spread last week crossed its annual low of -3%, reflecting a larger spread between the USD/MAD benchmark price and its central price, according to Attijari Global Research (AGR). Indeed, the reference price continues to evolve around 9 dirhams, its lowest level since the end of 2014, says AGR in its note "MAD Insights" covering the period from 07 to 11 December 2020.

This downward trend in the liquidity spread of the dirham is explained by the increase in the foreign exchange position of banks, explains the note, adding that the latter stands at more than 8.6 billion dirhams (MMDH), close to its annual highs, reports the MAP.

In the end, the variation in the USD/MAD parity is explained by a basket effect of 0.28% against a market effect of -0.10% this week, adds the same source. The note also highlights that the current levels of the dirham against the euro and the dollar create real opportunities to hedge the MAD. Thus, AGR recommends that operators importing dollars or exporters in euros hedge their future positions in foreign currencies. "In addition, we are paying particular attention this week to the pound sterling which is currently experiencing very high volatility in the markets," adds the same source. Taking into account a larger import flow than that of exports, the liquidity spread should move upwards, in the same direction that the exchange rate position of banks should shrink or even settle into negative territory. AGR maintains its scenario evoking a prospect of "depreciation of the dirham against the dollar and the euro over the next 3 months".

Thus, AGR anticipates "a reversal of the current trend of the USD/MAD parity" and "an accentuation of the depreciation movement of the dirham against the euro". According to its estimates, the EUR/MAD parity is expected to increase by 0.4%, 0.7% and 0.9% over the next 1, 2 and 3 months. Similarly, the magnitudes of depreciation of the MAD would be greater against the dollar due to the preponderant weight of this currency in the import category, notes the note, adding that the USD/MAD parity is expected to increase by 1.8%, 2.2% and 2.4% over 1, 2 and 3 months.