The Moroccan dirham is a closed currency and has been for many years but what is a closed currency? That’s a question that is often asked and not one that has a straightforward answer. Strictly speaking a closed currency is a currency that can only be traded in the country of origin and it is technically illegal to take the currency in and out of that country.
Many countries have foreign exchange controls and that would include restrictions on the amount of currency allowed in or out of the country. It also includes banning foreign currencies, restricting the exchange mechanism of the currency in the country and fixing exchange rates. However, many of these controls lead to a black market in currency exchange in the country of origin so the effectiveness of exchange controls including closing the currency is debatable. Even the UK had exchange controls from 1939 to 1979 to limit the exchangeability of the pound to other currencies. Comparing Holiday Money would not have been a realistic option!
The world of foreign exchange is a very complex one and beyond the scope of this article but the ecomomics of a country has a major effect on its currency. The reason a country may restrict it’s currency is usually to improve stability but it doesn’t always work and many closed currencies are freely available to trade in other countries.
At the moment there are 25 currencies in the world that are designated as closed, but on the pages of Compare Holiday Money you will find 7 suppliers selling Indian rupees, 19 suppliers selling Russian rubles and 5 suppliers selling Moroccan dirham for example and all of these currencies are technically closed and should not be traded out of their respective territories!
None of the listed FX traders sell Tunisian dinars even though this is a popular tourist destination because the controls on this currency are a lot stricter by the Tunisian Government. When they say closed they mean it so if you visit Tunisia and obtain your Dinars, make sure you spend it all before you leave the country!
In order to find out a little more we contacted Currency Online Group, a leading UK independent foreign exchange company. I asked them as traders, was it illegal for them to sell closed currencies?
Director of COG James Colvin, told us “It is not illegal to sell closed currencies and I have never heard of tourists having any immigration issues with customs converting small amounts of currency from people. It’s a very soft rule”
“Some countries currencies, however, are impossible for us to obtain and therefore sell on to customers. The restrictions on these are enforced heavily. These currencies are as follows – with recommendations on what can be taken and used instead:”
Cuba – take GBP
Armenia – take Euros
Belize – take USD
Cameroon – take USD (post-2007)
Libya – take USD
Myanmar- take USD (new and unmarked)
Namibia – take USD (post-2007)
Nepal – take USD (post-2007)
Nigeria – take USD (post-2007)
Papua New Guinea – take USD (post-2007)
Samoa – take USD
Uzbekistan – take USD
Venezuela – take USD (post-2007)
Zimbabwe – take USD (post-2007)
Closed but obtainable
“The ‘closed’ currencies that are easy to get hold of and still get good rates in the UK are as follows:”
South Africa Rand
“Governments that decide to close their own countries currency do so as a method aimed to bring more foreign currency into their country. It is not usually a strict rule, just something to try and encourage tourists to bring foreign notes. It is also used as a way to keep local money in the country of origin. This is all designed as a way to help to protect and improve their own economy.
People tend to panic when they see a country’s currency is closed, but as mentioned, it’s something the government enforce to try and attempt to control the flow of money. Not necessarily a strictly enforced rule as such.
The one currency I would recommend getting the majority whilst over there is Morocco, as it tends to have a much higher margin outside of Morocco, India to a certain extent too.”
Big thanks to James at Currency Online Group for clearing that up and providing the alternative currency information which will help if you are visiting those countries, and you will find the rates for these currencies at COG very competitive so check it out!