The National Bank of Ethiopia (NBE) revised its foreign currency policy today, granting exporters more flexibility in managing their earnings. As of November 14, 2024, exporters can retain 50% of their foreign currency indefinitely, with the remainder to be surrendered to commercial banks. Previously, exporters had to sell half of their currency earnings immediately, with the other half converted to local currency within a month.
NBE Governor Mamo Mihretu described the change as “temporary” and aimed at sustaining foreign currency inflows. Ethiopia’s reserves have reportedly risen from $1.4 billion to $3.4 billion, and commercial banks have cleared over $500 million in foreign debt, enabling them to handle payments solely for new letters of credit (LCs).
Over the past three months, commercial banks have acquired about $500 million monthly from exports, totaling $1.2 billion, with $1.7 billion sold to those needing foreign currency. According to Mamo, Ethiopia’s ongoing macroeconomic reform, now over 100 days in effect, is yielding positive results. The NBE is closely monitoring each bank’s currency holdings and liabilities.
In October, the NBE introduced an interbank money market, allowing banks to conduct short-term borrowing and lending with a maximum rate cap of NBR + 3%. The platform has seen $100 million in transactions in its first two weeks, signaling progress toward currency market stabilization.
