The Moroccan dirham has experienced a substantial decline in value against major foreign currencies. Over the past two months, the dirham has lost 3.9% of its value against the euro, dropping from 10.76 dirhams per euro on July 29 to 11.18 dirhams per euro on October 6. This marks the highest level reached by the European currency against the dirham since May 2018. The dirham has also depreciated by 6.5% against the US dollar, from 9.38 dirhams per dollar at the end of July to 9.99 dirhams per dollar at the beginning of October.
The decline of the dirham is attributed to the current global economic situation, which has led to a surge in energy and commodity prices, causing the dollar to strengthen. Morocco's currency is subject to a fluctuation band of ±5% around a central rate fixed based on a basket composed of 60% euros and 40% dollars. As the dollar accounts for 40% of the dirham's reference basket, its appreciation directly affects the dirham's value against the US currency.
The depreciation of the dirham has resulted in a significant increase in Morocco's import bill. The country's import prices have risen sharply, with the index of unit values at import increasing by 10% in the second quarter of 2026. The prices of imported energy products have surged by 53.1% during the same period. This increase in import costs is expected to worsen inflation in Morocco.
The trade deficit in Morocco has reached a record high of 282.61 billion dirhams (€25 billion) as of August 2026, representing a 25.4% increase from the previous year. The country's imports have risen by 15.8% to 617.5 billion dirhams, while exports have increased by only 8.7% to 334.89 billion dirhams. This significant widening of the trade deficit is a major concern for Morocco's economy.
The decline of the dirham and the surge in import prices have had a dual impact on Morocco's industrial sector and consumers. The country's economy, which relies heavily on imports, is vulnerable to fluctuations in global commodity prices and exchange rates. The situation is further complicated by Morocco's large public spending on prestige projects, such as the construction of football stadiums for the 2030 World Cup.
Morocco's economic challenges are compounded by a persistent social crisis, characterized by repeated attempts by young people to flee to Spanish enclaves of Ceuta and Melilla. The country's high inflation rate, which was among the highest in the world following the COVID-19 pandemic and the Ukraine conflict, has put significant pressure on households.
The ongoing economic difficulties in Morocco are likely to have far-reaching consequences for the country's economic growth and social stability. The government's ability to manage the trade deficit and mitigate the effects of inflation will be crucial in addressing these challenges. Key stakeholders, including economists and policymakers, will be closely monitoring the situation to assess the impact of the dirham's decline and the rising trade deficit.
Key points
- Morocco's dirham has depreciated by 3.9% against the euro and 6.5% against the US dollar over the past two months.
- The country's trade deficit has reached a record high of €25 billion as of August 2026.
- The decline of the dirham and the surge in import prices are expected to exacerbate inflation in Morocco.
