INSUBCONTINENT EXCLUSIVE:

The National Bank of Ethiopia has introduced a new policy limiting foreign exchange trading spreads to 2%, effective October 16, 2024.This

forex transactions.Ethiopia shifted to a market-based exchange rate system in July 2024, replacing the previous tightly controlled regime

This change is part of broader economic reforms addressing long-standing financial imbalances in the country.Before the reforms, commercial

banks traded the Ethiopian birr at around 57 to one US dollar, with a spread of less than one birr

By October 12, 2024, the average selling rate had climbed to 125 birr per dollar

dollars at 113 birr and selling at 115 birr.Ethiopia Caps Forex Spreads at 2% in Market Reform Push

(Photo Internet reproduction)The new policy also requires banks to disclose all fees and commissions separately, enhancing transparency in

foreign exchange transactions

While capping the trading spread, the central bank still allows some flexibility.Navigating Economic Reforms in EthiopiaBanks can adjust

rates based on market conditions and negotiations with specific clients, balancing stability with market dynamics

reforms aim to make Ethiopia more attractive to foreign investors by stabilizing the forex market and increasing transparency

However, businesses must remain cautious about inflationary pressures due to currency depreciation.The new policy could help reduce the gap

between official and black market exchange rates, potentially curbing illegal currency trading

economic transformation, the full impact of these measures remains to be seen