why it is urgent to hedge your currency positions

The current levels of the dirham against the euro and the dollar create real hedging opportunities.

AGR recommends that operators importing dollars or exporting euros to hedge their future positions in foreign currencies.

The spread of the dirham (MAD) broke last week, its annual low of -3% reflecting a larger gap between the reference price USD / MAD and its central price, according to Attijari Global Research (AGR). Indeed, the reference price continues to evolve around 9 dirhams, its lowest level since the end of 2014, specifies AGR in its “MAD Insights” note covering the period from 07 to 11 December 2020.

This downward trend in the liquidity spread of the dirham is explained by the enhancement of the foreign exchange position of banks, explains the note, adding that the latter stands at more than 8.6 billion DH, close to its annual highs.

In the end, the change in the USD / MAD parity is explained by a basket effect of 0.28% against a market effect of -0.10% this week, adds the same source.

The note also highlights that the current levels of the dirham against the euro and the dollar create real opportunities to hedge the MAD. AGR therefore recommends that operators importing in dollars or exporting in euros to hedge their future positions in foreign currencies.

“In addition, this week we are paying particular attention to the pound sterling which is currently suffering from very high volatility in the markets”, adds the same source.

Taking into account a greater import flow than that for export, the liquidity spread should move upward, in the same direction that the banks’ foreign exchange position should narrow, or even settle in negative territory. , AGR maintains its scenario evoking a prospect of “depreciation of the dirham against the dollar and the euro during the next 3 months”.

Thus, AGR anticipates “a reversal of the current trend of the USD / MAD parity” and “an increase in the depreciation of the dirham against the euro”. According to his estimates, the EUR / MAD parity should increase by 0.4%, 0.7% and 0.9% in 1, 2 and 3 months.

Likewise, the MAD depreciation amplitudes would be greater against the dollar because of the preponderant weight of this currency in the import section, the note notes, adding the USD / MAD parity should be established up by 1.8% , 2.2% and 2.4% over 1, 2 and 3 months.

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