Morocco currency stable as central bank introduces flexible rates

CASABLANCA/DUBAI, Jan 16 (Reuters): Morocco's dirham barely moved against major currencies and there was little speculative trade as the central bank introduced a more flexible exchange rate on Monday, part of free-market reforms recommended by the International Monetary Fund.

The new system, designed to keep exports competitive and protect Morocco's foreign exchange reserves, widened the band in which the dirham can trade against hard currencies to 2.5 per cent on either side of a reference price, from the previous 0.3 per cent.

This could potentially give speculators more room to take positions against the dirham. But in the initial hours of trading on Monday, the market was calm and almost all activity was to fill commercial orders.

"The central bank made it very clear that they will not tolerate speculation - bankers are just waiting for clients' orders," said one Moroccan banker.