Séance du Vendredi 23 Décembre 2016

By Abbas Alghayati

Rabat – The Fed rate increase has a number of important repercussions on Moroccans. It essentially means, first and foremost, that the dollar will get stronger. This means that if you have any US currency, save it for a while and don’t exchange it for anything less than 10 MAD/$.

More importantly, once the Fed starts raising interest rates, it generally means that they have already committed to future rate hikes. What this means is that the value of the USD will be increasing over the long haul as a matter of policy. Ultimately, if you are looking to export Moroccan products into US markets, the upcoming year is a great opportunity to take full advantage of the high return in terms of the exchange rate.

This is also an ideal time to invest in Morocco’s Frontier Market. The Morocco Halal Fund pulled out of the Moroccan Market last year but recently issued a Strong Buy recommendation to all of its partners looking to take full advantage of the push out of stocks into commodities. Morocco Halal Fund has issued Strong Buy recommendations across the board in all Halal compliant stocks.

There is a lot of speculation as to why the Fed decided to finally raise rates. The general consensus is that the US is seeking to punish Turkey, Russia, Brazil and South Africa, not to mention taking a swipe at China for imposing itself into the European Currency Basket earlier this year.

Moroccan Americans who are in homes they cannot afford should seriously consider selling as past interest rate hikes have signalled declines in property values. Many economists cite the last interest rate hike in 2006 as one of the main precipitators of the housing bubble bursting back in 2008. By that same token, if you are looking to purchase a home now, you need to be aware that you will be paying more for your mortgage. In addition to a tightening of what will be considered as “income” potential, homeowners will also have to struggle to plunk down larger deposits and in many cases pay more fees when wrapping up closing costs.

The one big plus for Moroccan Americans who are living in the US and were thinking about purchasing property in Morocco, there may never be a better time to do so. Morocco has been experiencing a serious decline in real estate prices over the past five years, particularly in the higher end apartment and villa segments of the market. Casablanca has seen prices drop by as much as 30% in some areas, whereas Marrakesh has seen prices drop by as much as 70% from the highs of 2010.  It is likely that housing prices in Morocco will continue to drop precipitously, particularly in places like Rabat and Tangiers that were previously spared from price drops. As prices drop further in Rabat, Kenitra and Tangiers, over the next couple of years, Moroccan Americans will have opportunities to buy up properties in Morocco at bargain basement prices.