Top-performing Arab economy balks at currency float on Egypt

In five decades of importing steel wires, Zahar Benmoussa’s company never worried about currency risks -- until Morocco announced plans to float the dirham.

“For the first time in our history, we started to hedge” in the currency market, said Benmoussa, managing director at Casablanca-based Grillages Marocains. Across Morocco, fears of a weaker dirham triggered a rush for dollars and euros, causing a $3 billion drop in its reserves in just three months this year.

Then in June, the government put its plans on hold again. It was at least the second time it stalled on a move supported by the International Monetary Fund and a centerpiece of Morocco’s ambitions to become North Africa’s dominant financial hub. By delaying, it risks wasting a “perfect time” in terms of its economic health to loosen controls, according to Charles Robertson, global chief economist at London-based Renaissance Capital.