Faced with inflation, the Fed raised its rates.
The US Federal Reserve’s decision to raise interest rates on federal funds will accelerate the outflow of capital to US financial markets. It will also affect Moroccan borrowing on international markets due to the rise in the dollar. This measure will be beneficial for our exports, but will have negative effects on imports.
The decision by the US Federal Reserve (Fed) to raise interest rates on federal funds will accelerate the flight of capital to financial markets in the United States. This is what Omar Bako, economic analyst and exchange rate policy expert, told Assahra Al Maghribia. Likewise, continues the expert, this increase, by a quarter of a percentage point to 0.5%, the first since 2018, affects Moroccan borrowings on international markets due to the rise of the dollar. Indeed, Morocco plans to use the international market to borrow about four billion dollars as provided for in the 2022 Finance Law, in addition to 65.4 billion DH on the domestic market through medium and medium-term debt. long terms.
According to Bako, the measure will be positive for Moroccan exports, while it should have negative repercussions on its imports, in particular those of energy products and wheat. Tayeb Aisse, economic expert, indicates for his part that the increase in the interest rate of the American Treasury refers directly to the rise in the value of the dollar, which leads to the depreciation of the dirham against this currency on which the Morocco account to acquire its needs in foreign markets. This will raise the level of inflation. Thus, the economist takes care that the Moroccan trade balance deficit increases as a result of these developments, adding that Moroccan exports currently support only 62% of imports. He also considers that the increase in interest rates on US federal funds contributes to widening this deficit, in particular with the rise in oil and wheat prices on world markets.
It should also be recalled that the assumptions of the 2022 financial project were based on the adoption of the cereal harvest at around 70 million quintals and a butane price of 450 dollars per tonne and an exchange rate of the dollar against the dirham, which amounted to about 9.3%. However, oil prices rose 8% last Thursday as the market rebounded from several days of losses with renewed focus on the lack of supply in the coming weeks due to sanctions against Russia. For their part, Brent crude futures rose $8.62, or 8.79%, to settle at $106.64 a barrel, the biggest percentage increase since mid-2020. U.S. West Texas Intermediate crude rose $7.94, or 8.35%, to $102.98 a barrel during settlement. Over the past eight sessions, the price of a barrel of oil reached its highest level of 139 dollars before reaching its lowest trading level of 98 dollars, a difference of more than 40 dollars. These fluctuations taken into account after several countries banned the purchase of Russian oil about three weeks ago.
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