The liquidity needs of Moroccan banks intensified in 2023, reaching an average weekly requirement of 83.2 billion dirhams (MMDH), up from 80.9 MMDH the previous year, according to Bank Al-Maghrib (BAM).
This increase is primarily attributed to a significant rise in cash circulation and improvements in foreign assets, BAM explains in its annual report on the economic, monetary, and financial situation for 2023.
In response, the central bank maintained its policy of fully satisfying banks’ liquidity requests, increasing its intervention balance to an average of 96.8 MMDH per week. By instrument, the volume of seven-day advances settled at 40.8 MMDH, while injections through one- and three-month operations amounted to 39.4 MMDH. Refinancing under economic support programs saw an increase of 13.7 MMDH, reaching 16.6 MMDH. Additionally, BAM conducted a currency swap operation worth 100 million dirhams (MDH) and was requested three times for 24-hour advances totaling 5 MMDH.
Under these conditions, the average duration of Bank Al-Maghrib’s interventions extended from 46 days to 50.4 days.
Further analysis reveals a reduction in the banks’ liquidity needs from 77 MMDH in January to 60.3 MMDH in March, largely due to the expansive effect of foreign exchange reserves.
However, the liquidity deficit progressively worsened throughout the year, peaking at 107.1 MMDH in December, primarily driven by increased cash demand.
Despite these fluctuations, the weighted average rate in the interbank market, the operational target of monetary policy, remained aligned with the key interest rate throughout the year. The average daily trading volume decreased from 3.9 MMDH in 2022 to 3.5 MMDH in 2023.
This report underscores the growing liquidity challenges faced by Moroccan banks, highlighting the central bank’s critical role in maintaining financial stability amidst evolving economic conditions.
