The National Bank of Ethiopia (NBE) has issued a new directive, “Foreign Exchange Exposure Limits of Banks Directive No. SBB/96/2025,” effective November 10, 2025, replacing the previous Directive No. SBB/27/2001.
The directive limits banks’ overall foreign exchange exposure to ±18% of Tier 1 capital at the close of each business day. While exposure in individual currencies may vary by bank, total exposure must remain within this overall prudential limit.
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Banks must calculate their exposure daily on a consolidated basis—including subsidiaries and forex bureaus—using the shorthand method that converts all long and short foreign currency positions into Birr equivalents.
Any excess exposure must be corrected by the next business day. Failure to do so will result in a financial penalty equivalent to a 10% annual interest rate on the uncorrected excess. Additional fines include Birr 50,000 for misreporting or manipulation and Birr 10,000 per day for failure to submit daily reports.
Repeated non-compliance may lead to suspension from foreign exchange activities, dividend restrictions, or loss of access to NBE facilities.
The directive aims to strengthen banks’ risk management practices and maintain stability in Ethiopia’s foreign exchange market.
