Moroccan dirham to avoid fate of Egyptian pound

The announcement on Friday by Morocco’s central bank that it will move to a more flexible exchange rate regime has raised concerns that the dirham will follow the path of currencies in the rest of North Africa, where similar policy shifts have been accompanied by large devaluations. But we think that is unlikely. At this stage, the move represents a tweak rather than a major change in policy and the fundamentals suggest that there is no need for a significant currency adjustment in Morocco.