Ethiopia currency slides as Central Bank eases forex curbs

ADDIS ABABA

Ethiopia's Central Bank announced on Monday that it was easing curbs on its foreign exchange regime, a move which saw the value of the local currency slide by about 30 percent.

The major reform was unveiled as the deeply indebted country awaits a multi-billion dollar deal on crucial funding from the International Monetary Fund after long and fraught negotiations.

The National Bank of Ethiopia announced a series of foreign exchange reforms which it said involved "significant new policy changes."

The first measure was a "shift to a market-based exchange regime," the NBE said in a statement.

"Banks are henceforth allowed to buy and sell foreign currencies from/to their clients and among themselves at freely negotiated rates, and with the NBE making only limited interventions to support the market in its early days and if justified by disorderly market conditions," it said.

The U.S. dollar was buying 74.73 birr and selling at 76.23, the leading Commercial Bank of Ethiopia said in a statement published on X. On July 26, the buying rate was 57.48 and selling 58.64.

Until now, the rate for the birr, a non-convertible and non-exportable currency, was set daily by the NBE.

The central bank also announced on Monday it would allow foreign exchange to be retained by exporters and commercial banks "thus substantially boosting FX supplies to the private sector".

Ethiopian Prime Minister Abiy Ahmed said earlier this month that he was expecting about $10.5 billion in financial aid in the coming years once the country wraps up its negotiations with international lending institutions.