Morocco Cenbank governor says no devaluation in dirham liberalisation

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UPDATE 1-Morocco Cenbank governor says no devaluation in dirham liberalisation

(Adds governors comments)
    By Samia Errazzouki
    RABAT, June 20 (Reuters) - Morocco's central bank will
announce the date of the first phase of the plan to liberalise
the dirham currency by the end of the June but the reform
programme does not include a devaluation, the bank's governor
said on Tuesday.
    The North African kingdom has been working with the
International Monetary Fund on liberalising its currency as part
of a reform package to strengthen its finances.
    Late last year, the government said the first stages of a
move to a flexible exchange rate would be implemented in the
second half of 2017.
    "I will hold a press conference with the Minister of Finance
by the end of June to announce the date for the first phase,"
Governor Abdellatif Jouahri said, specifying the announcement
would be made after the Eid al-Fitr holiday next weekend.
    "Provoking a devaluation of the dirham prior to floating the
currency would be counterproductive," Jouahri told reporters,
denying local media reports about such a measure.
    Jouahri previously announced the first phase of the currency
flexibility would begin during the second half of 2017.
    "Steps will be taken progressively, taking into
consideration internal and external elements," he said regarding
the widening of the currency's official bands for fluctuation -
one of the first stages in a flexible exchange rate.
    The dirham's rate is currently tightly controlled via a 60
percent weighting to the euro and 40 percent to the dollar.
    On Monday, Fitch Ratings said "the liberalisation of the
dirham is likely to have a limited impact on macroeconomic
stability in the short and medium term ... Public finances and
market access should not be significantly affected".
    Jouahri also said the steep erosion of Morocco's foreign
reserves by 44 billion dirham ($4.49 billion) in the last two
months was a result of hedging, anticipation and speculation
ahead of the currency flexibility.
    Morocco's central bank kept its benchmark interest rate
unchanged at 2.25 percent on Tuesday, saying the current level
remains appropriate. The bank, known as Bank al-Maghrib, said it
expected inflation to stay at 0.9 percent in 2017 and would
accelerate to 1.6 percent in 2018.
($1 = 9.8034 Moroccan dirham)

 (Reporting by Samia Errazzouki; writing by Patrick Markey;
editing by Mark Heinrich)
 ((; +213-661-692993; Reuters


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