Morocco’s central financial institution caps its first treasury bond purchases

RABAT – Morocco’s central financial institution stated on Thursday it plans to restrict its first ever buy operations of treasury bonds to 25 billion dirhams, as a part of a push to bolster liquidity out there.

The central financial institution has up to now injected 16.2 billion dirhams ($1.6 bln) by means of treasury bond purchases on January 9 and 16.

The transfer comes amid decrease demand for treasury bonds attributable to “fears of traders relating to the evolution of the benchmark rate of interest,” stated Younes Issami of the Financial institution’s financial coverage and international trade division.

Morocco’s central financial institution raised its benchmark rate of interest in December by 50 foundation factors to 2.5% because it appears to be like to curb inflation.

“Most traders haven’t any visibility on the evolution of charges…They most popular to attend quite than make investments,” he stated.

The Moroccan central financial institution restricted the purchases to bonds with lower than a 12 months maturity issued lower than a month in the past, he stated.

Shopping for treasury bonds is a device of “boosting liquidity with out affecting the central financial institution’s financial coverage,” he stated.

Individually, the central financial institution is contemplating issuing a world bond in 2023, he stated with out providing additional particulars on the quantity and the foreign money, Issami stated.

Overseas debt represented 15.5% of Moroccan GDP in 2022 and is predicted to face at 16.5% in each 2023 and 2024, based on central financial institution figures.

(Reporting by Ahmed Eljechtimi; Enhancing by Toby Chopra)