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Toronto – Months after introducing a market-based foreign exchange regime in Ethiopia, the National Bank of Ethiopia on Tuesday has announced a new regulatory measure.
The Bank is now telling Banks in the country that the rate of exchange difference between buying and selling prices should not be more than 2 percent.
From practices over the past three or so months, banks were mostly selling US dollars by about 10 percent more than the buying prices.
There has been anticipation on the part of the government that narrowing the difference between the exchange rate at the banks and the parallel market would enable the government to enhance its foreign exchange reserve. According to sources, it appears that the government has not achieved the goal.
Many of the banks in the country have not yet responded to the new regulation. However, the rate of exchange from the Commercial Bank of Ethiopia (CBE) published on Tuesday seems to reflect the new regulation that the National Bank introduced. It was buying $US for 113.13 and selling for 115.39. The rate of exchange in the black market is over 140, according to sources.
The National Bank of Ethiopia said the changes it introduced were based on observation from “reviewing the performance of the foreign exchange market since the transition to a new FX regime on July 29, 2024”
Explaining the issue further, the Bank said in its statement “…, it is to be recalled that the National Bank previously required that banks include all FX related fees and commissions (except those charges set in nominal terms) in their trading spreads between the buying and selling rate. However, based on lessons gained from experience and inputs received from the banking sector, it has now become important to review the earlier decision regarding the treatment of FX related spreads and fees.”
While determining the buying and selling rate different not to exceed 2 percent, the National Bank has allowed exchange rate fees and commission “shall be separately disclosed, reported, and charged to bank clients.”
1 U.S. dollar was exchanged for 57 Ethiopian birr before the National Bank announced the “Market Based Exchange Rate Regime” in late July this year. In less than two weeks after the policy change, the exchange rate dropped to over 112.
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Perhaps, the correct action to take would be to make ‘black market’ illegal, treasonous & “Terrorist Activity” for foreigners involved in such activities, punishable by death and total confiscation of all assets (world wide), period!
What stops bankers from buying legally and selling in “black market” for higher price, than the 2% set by NBE?
BRICS’ s Blockchain based ‘UNIT’ currency , 40% COLD + Local Currency trade-settlement coming…
“Reset Coming: New One-World System to Revalue Gold to $150k, Is BRICS the Trigger? Andy”
Link = youtube.com/watch?v=-K6tTaqPXXk
Be well.
One can’t have both ways. Eitheir free market forces and free economy will operate unhindered or the choice of unrealistic state command economy by the and of ruling party and Abiy that certainly
will end up in economic fiasco..