Psychological aspects of the foreign exchange market: the case of Moroccan foreign exchange operators

Purpose This paper aims to explore the psychological aspects related to the behavior of Moroccan foreign exchange operators in the context of a gradual transition toward a more flexible exchange rate regime. Furthermore, it pursues the objective of directly examining and understanding the various psychological facets of the behavior of these operators within their environment. Design/methodology/approach A methodological approach using interview-based surveys was adopted to generate verbatim data, which will be subject to qualitative content analysis. The target population consists of foreign exchange operators working in the trading rooms of banks that hold the market maker status granted by Bank Al-Maghrib. Findings The results of the content analysis revealed four main dimensions related to the psychological aspects of the behavior of currency operators: “Behavioral Heterogeneity”, “Mimetic Behavior and Influence of Major Banks”, “Behavioral Bias” and “Technical Analysis and Psychology”. Research limitations/implications The research, focusing on an unexplored field, relied heavily on a subjective approach, making it difficult to address through a purely quantitative method. Understanding the subjective meanings attributed by foreign exchange operators required an empathic approach, which was challenging due to the unique nature of the operators and interactions. This subjectivity could introduce biases during both data coding and content analysis. To mitigate this, the authors applied a double coding process. In addition, respondents may have faced rationalization bias, selectively recalling certain aspects of the phenomenon. These limitations highlight the challenges inherent in interpreting subjective data. Practical implications The findings highlight key psychological factors such as operator heterogeneity, mimetic behavior, cognitive biases and reliance on technical analysis that significantly influence the stability and volatility of the Moroccan foreign exchange market. These insights offer a valuable foundation for designing targeted training programs for market participants and developing decision-support tools to mitigate behavioral biases. From a policy standpoint, the results underscore the need for regulatory bodies, particularly Bank Al-Maghrib, to incorporate psychological dimensions into their supervisory frameworks. As exchange rate flexibility increases, accounting for these behavioral dynamics becomes essential to reinforcing market resilience and ensuring the stability of the financial system in the face of external shocks and economic uncertainty. Social implications On the social level, this research highlights the asymmetric power dynamics between large and small banks, as well as the psychological effects of stress and mimetic behavior on operator conduct. These findings emphasize the importance of fostering a professional environment grounded in transparency, continuous financial education and interbank cooperation to mitigate irrational decision-making and limit mimetic behaviors. In addition, the establishment of a market behavior observatory is warranted to institutionalize the study of the psychological and social dimensions influencing decision-making processes within trading rooms. By addressing both organizational structures and the regulation of professional practices, such an initiative would provide a structured framework to analyze and manage the psychological dynamics within trading environments, promoting a culture of transparency, stress management and collective accountability, thereby contributing to the social stability of the financial system. Originality/value The originality of the research lies in addressing a recent issue related to the psychological aspects of Moroccan currency exchange operators within the context of the gradual liberalization of the exchange rate regime. The authors adopt a purely exploratory approach by using interviews to collect primary data directly from their environment.