Morocco's central bank gold increased by 8 % in value in 2023
Bank Al-Maghrib's vaults contain 22 tonnes of gold, valued at 14.53 billion dirhams
The latest annual report of the Central Bank of Morocco, for the year 2023 and recently presented to King Mohammed VI at the end of July by the governor, Abdelatif Jouahri, reveals that the gold reserves held by the institution remain stable at 711,032 ounces (22.11 tonnes).
Although the amount of gold has remained unchanged for some time, its value has appreciated by 8 % over the last year to 14.5 billion dirhams as of 31 December 2023.
Gold and the dirham rise
The significant rise in the price of gold in recent months, which at the close of trading on 13 August at the London Bullion Market Association (the international body that determines the price of the metal) reached USD 2,471 per ounce, has led to this increase in the value of Morocco's reserves.
Another determining factor in the appreciation of Bank Al-Maghrib's gold during 2023 has been the appreciation of the Moroccan currency, the dirham, against the dollar. It should be borne in mind that the official price of gold is determined in dollars, so that the fluctuation of the different currencies against the US currency has a strong influence on the valuation of the precious metal.
Thus, at the end of 2023, the price per ounce of gold was 20,439 dirhams, compared with 18,985 dirhams at the end of 2022.
Location of reserves
As for the physical location of the reserves, it should be noted that Bank Al-Maghrib's vaults hold just 4,855 ounces, representing only 0.68% of the total. The rest, 706,177 ounces (some 1,765 bars of 400 ounces, which are used in bank reserves) are deposited abroad.
The Moroccan Central Bank's report does not specify the exact location of most of its gold reserves. However, this is not an uncommon practice among central banks: it is common for them to hold part of their reserves on their own territory and the rest in the vaults of central banks such as the Bank of England, the Banque de France or the US Federal Reserve Bank, which are accustomed to holding this type of asset.
It is true, however, that in recent years the central banks of some countries have tended to repatriate most of their reserves for geopolitical and strategic reasons. In the case of Morocco, there is no information available from Bank Al-Maghrib.
Conservative policy
The data revealed in the annual report confirm the conservative policy of the Central Bank of Morocco in the management of its gold reserves, as it has been holding the same amount of gold for years, 22.1 tonnes, which currently represents 4.5% of its total foreign exchange reserves.
As the Governor of the Moroccan Central Bank, Abdelatif Jouahri, himself recently commented, Morocco's gold reserves, which currently represent 4.5 % of the country's total foreign exchange reserves, are in line with the world average.
According to Jouahri, Bank Al-Maghrib follows a standard practice in the management of its gold and guides its reserves policy around three main principles: security, liquidity and yield.
The governor explained that the first principle, safety, ensures that investments are made in low-risk categories, such as 'AAA' or 'AA' rated assets. The second principle, liquidity, ensures that reserves can be easily converted into cash to meet the country's needs. And the third principle, yield, while important, comes last: the Central Bank seeks first to secure its assets and guarantee their liquidity before looking for optimal yield, the governor added.
Jouahri also explained that, although gold is considered as a safe haven asset, its management as a component of foreign exchange reserves presents specific challenges and must be carried out with respect for the Central Bank's principles, particularly in terms of liquidity and security.
He said that gold, unlike foreign exchange, cannot be used as easily for immediate market interventions, which limits its usefulness in certain situations of urgent liquidity needs.
Central banks and gold
Fluctuations in the price of gold, especially its sharp rise over the past five years to its highest price ever (2,471 dollars per ounce), have prompted some central banks to sell part of their reserves to obtain liquidity, while others have been making sustained purchases of gold to increase their holdings.
According to the latest list published at the beginning of August (with data at the end of June) by the World Gold Council (WGC), an international organisation that analyses the gold reserves held by central banks, Bank Al-Maghrib is in 66th place, with the 22.11 tonnes mentioned, behind Bolivia and ahead of Afghanistan.
By way of comparison, Spain is 22nd with 281.6 tonnes of gold, while Algeria is 27th with 173.6 tonnes, Libya 30th with 146.7 tonnes and Egypt 33rd with 126.6 tonnes.
The ranking of countries with the largest gold reserves has been led by the same countries for years: the United States, in first place, with 8,133.5 tonnes; Germany, with 3,351.5 tonnes; Italy, with 2,451.8 tonnes; France, with 2,437 tonnes; Russia, with 2,335.9 tonnes; and China, with 2,264.3 tonnes.