Currency Fluctuations, Economic Growth, and Export Competitiveness in Morocco

Abstract

Exports are widely regarded as a critical indicator of a nation’s macroeconomic performance and external sector strength, reflecting both production capacity and international competitiveness. This study explores the relationship between exchange rate dynamics and export performance in Morocco, with the objective of identifying how fluctuations in currency value influence trade outcomes over time. By focusing on a long-term perspective, the analysis seeks to provide a comprehensive understanding of the macroeconomic mechanisms that connect exchange rate movements with export growth in a developing economy. The study employs annual time series data covering the period from 1980 to 2025, enabling the capture of both short-run variations and long-run structural trends. A quantitative econometric framework is utilized to examine the direction and magnitude of relationships among key variables, including exchange rate and gross domestic product. The empirical strategy is designed to assess not only the direct effect of exchange rate changes on exports but also the broader macroeconomic interactions that shape this relationship. The findings reveal that exchange rate movements exert a positive and statistically significant influence on Morocco’s export performance, suggesting that currency depreciation can enhance international competitiveness by making domestic goods relatively cheaper in global markets. Additionally, gross domestic product is found to play a significant role, indicating that economic expansion contributes to export capacity while also influencing exchange rate behavior. The results further highlight that variability in the exchange rate introduces notable effects on export dynamics, emphasizing the importance of stability in sustaining consistent trade growth. From a policy perspective, the study underscores the need for a balanced approach to exchange rate management. Structural reforms aimed at increasing economic flexibility, alongside targeted trade policy adjustments, can help mitigate adverse effects associated with volatility. Furthermore, implementing measures to stabilize exchange rate fluctuations may support a more predictable trade environment, thereby enhancing export performance and contributing to long-term economic resilience.