New Measures for Ethiopia’s Foreign Exchange Market
The National Bank of Ethiopia (NBE) has announced a series of reforms to the foreign exchange (FX) market, effective May 20, 2025. The measures aim to improve flexibility for importers and travelers while aligning Ethiopia’s FX practices with global standards.
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Context of the Reforms
Since the introduction of the new FX system in July 2024, Ethiopia has seen improvements in its foreign exchange market and balance of payments. Goods exports have risen by over 100%, with notable increases in services, remittances, and capital inflows. The NBE notes that these reforms build on recent initiatives, such as bi-weekly FX auctions, to further enhance market conditions.
Key Changes Introduced
The NBE outlined three main reforms to address operational challenges in the FX market:
- Higher Limits for Importers: The import advance limit has increased from USD 5,000 to USD 50,000 per transaction to ease constraints on importers.
- Higher FX Cash Limits for Travelers: Ethiopians traveling abroad can now access up to USD 10,000 for personal travel and USD 15,000 for business travel, with an option to use up to 20% of their FX balance via debit card.
- Simplified Global FX Fees: Effective May 26, 2025, bank fees for FX purchases will be capped at 4%, with transparent pricing to be disclosed publicly.
Impact on Ethiopia’s Financial Sector
The NBE states that these changes aim to support a competitive and growing foreign exchange market, addressing the needs of Ethiopia’s banking consumers and private sector while ensuring transparency and operational efficiency.
