INTERNATIONAL HIGHLIGHTS
The dollar supported by the US infrastructure plan The European currency remains under pressure and continues to decline against the dollar this week by -0.29%, going from 1.179 to 1.176.
The euro is suffering from the consequences of the health situation in Europe. The new restrictions put in place and the difficulties regarding the vaccination campaign would delay the economic recovery.
The US President announced an additional $ 2,000 Bn infrastructure plan. The latter fueled market confidence for a solid economic recovery within the United States.
MAD EVOLUTION AND FOREIGN EXCHANGE MARKET LIQUIDITY INDICATORS
The liquidity effect dominates the MAD evolution At the end of the week, the USD/MAD parity rose from 9.057 to 9.046. In this regard, the dirham shows an appreciation against the dollar of + 0.12%. This change is exclusively explained by a market effect of -0.11% against -0.01% for the basket effect.
The spread between the MAD reference price and its central price widened by 10.7 BPS in one week, from -4.01% to -4.11%. However, the foreign exchange position of the banks contracted this week to MAD 1.4 Bn, against an average of MAD 3.4 Bn a week before. The reason behind is a visible catch-up effect of import flows on the foreign exchange market during the same period.
VOLATILITY INDICATORS
Towards a MAD appreciation on the short term
We continue to favor hedging strategies to deal with the dirham volatility against the main benchmark currencies. We recommend exporting companies to hedge the MAD in the light of its appreciation over the next 3 months.
EUR/USD OUTLOOK – BLOOMBERG
For the second consecutive week, the main international brokers revised downward their bullish forecasts concerning the EUR/USD parity. The consensus forecast anticipates parity levels of 1.20 during the current quarter before moving towards 1.22 by 2021. The pair is expected to stabilize at this level by 2023. It is expected to decrease to 1.19 by 2024.
The forecast of a better performance of the dollar this week was supported by the publication of positive data in the United States combined with the announcement of a new stimulus package of $ 2,000 Bn after the one adopted in March of $ 1.900 Bn. These announcements point to a solid economic recovery in the United States. On the one hand, manufacturing activity growth accelerated more than expected in March to a 37-year high. On the other hand,the markets welcomed well the US employment figures announced on Friday, i.e. 916 K non-agricultural job creationswere recorded last month against a forecast of 647 K.
EUR/MAD AND USD/MAD OUTLOOK - AGR
Taking into account the continued widening of liquidity spreads and the dirham appreciation during this week, we maintained our scenario of the MAD appreciation against the dollar, while revising our forecasts slightly downwards over 2 and 3 months. We anticipate a resumption
of export operations bringing current market liquidity levels to more comfortable thresholds.
We expect the dirham to appreciate against the dollar in 1, 2 and 3 month horizons. Against the euro, it would depreciate in the 1, 2 and 3 month horizons compared to its current level.
The MAD would appreciate against the dollar by 1.3%, 1.1% and 1.0% in 1, 2 and 3 month horizons from a current level of 9.05. The USD/MAD parity would be at 8.92, 8.94 and 8.95 for 1, 2 and 3 month horizons, against an initial forecast of 8.92, 8.95 and 8.98.
The levels of the dirham depreciation against the euro would reach 1.3%, 1.5% and 1.6% over 1, 2 and 3 months. Consequently, the EUR/MAD parity would stand at 10.80, 10.82 and 10.83 against an initial forecast of 10.80, 10.83 and 10.87 over the same periods and against a current price of 10,66.
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