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Exchange Rates and their Effect on Morocco Report.

Extracts from this document...

Introduction

´╗┐Title of Report: ?Economic report for Morocco? Prepared By: Mark Anderson William Bligh Stephen Dunne Christopher Cornally Sagar Dhalwani Prepared For: Margaret Hurley, Finance Lecturer at NUI Maynooth Introduction Currency Most markets operate by trading goods or service in exchange for money. That is to say today I could go to local farmers market and buy x amount of apples for one euro. I thereby get the goods and the seller receives money which he can then in turn exchange for other goods. The one euro in this transaction is a medium of exchange. Without a currency, markets would revert back to a barter system. Participants in markets would have to exchange goods and services for other goods and services. Currency markets are different because rather than trading currencies for goods or services, currencies markets trade one currency for another currency. Types of Exchange rate regimes Free float Managed Float Different types of currency peg Usage of foreign currency Source: Wikipedia The two basic choices a country has over its exchange rate regime is whether to fix the value of its currency to other currencies or to let it float and let the market decide what the value of its currency should be. In a free floating exchange rate regime the price of a currency is determined by supply and demand. A shift upwards in the demand curve and downwards in the supply for the home currency will lead that currency to appreciate in value. ...read more.

Middle

Morocco's largest trading partners consist of the 27 countries within the E.U., China and the United States. These accumulate to 57.9%, 6.4% and 5.7% of Morocco's trade, respectively. On the 15th June 2004 both Morocco and the United States signed an agreement, the FTA (Free Trade Agreement) making Morocco the 62nd largest export market for American goods. One of Morocco's main imports is oil from Saudi Arabia, which consists of 5.7% of Morocco's imports. Morocco's export market is made up primarily of goods from the primary sector, as Morocco's arable land and sea side location make farming and fishing there most sustainable source of income. Morocco also contains many natural resources like manganese, iron ore, fish and salt. Morocco is also the world's leading supplier of phosphate. Morocco has also become a major tourist destination, mainly popular among Europeans. In 2008, at the beginning of the economic crises, Morocco had 8 million visitors to the country and they have also developed a very ambitious strategy to try and overcome the recession through tourism. This involves building new hotels in sea side resorts and providing 600,000 jobs in the process, this development has been dubbed 'Vision 2010'. Morocco's market economy has benefited from the country's low cost of labour and also its proximity to Europe. Transport of goods to European cities is made easy through the Mediterranean Sea. ...read more.

Conclusion

The Moroccan Dirham is pegged to a basket of currencies which means that the exchange rate can adapt to changes in the market to a certain extent. After studying Morocco?s past and present economic state we have come to the conclusion that if the primary resources are sustainable and there are a large number of tourists each year then Morocco looks like it has a bright economic future ahead. Teamwork Overview Mark Anderson: ?I felt that there was a very good understanding and clear outline in our group project and that everybody worked well together to fulfill their roles in the group work. At the very start of the project we kept in contact through e-mail and after a while of co-operating we decided that we would meet on Tuesdays and Thursdays at a pre determined time. During the meetings we began writing down the topics to cover and when we outlined the general topics we assigned work to each group member. At the later meetings we compared the work done by each member to ensure that there was no overlap of content. At the end when all of the research work was done each member wrote out their topics in their own words and provided the necessary graphs in relation to the material. The topics were assigned as follows: Mark: Conclusion, teamwork overview and editing the report. Stephen: Economic overview of Morocco. William: General outline of exchange rates, currency, introduction. Sagar: Exchange Rate regimes of Morocco (focus on past). Christopher: future outlook for Morocco ...read more.

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