The National Bank of Ethiopia (NBE) has unveiled sweeping amendments to the country’s foreign exchange framework, introducing forward exchange trading, granting full foreign currency retention for service exporters, and significantly reducing administrative approval requirements in what marks one of the most consequential steps in Ethiopia’s ongoing FX reform.
Under Directive No. FXD/04/2026, banks are now permitted to offer forward exchange rate contracts alongside spot transactions, allowing businesses to lock in exchange rates for future settlements. The introduction of forward trading provides companies with a tool to hedge against exchange rate volatility, a move widely seen as a structural development in Ethiopia’s evolving FX market architecture.
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In a parallel reform aimed at boosting foreign currency inflows, service exporters are now entitled to retain 100 percent of their export proceeds in foreign currency accounts for an indefinite period. The measure applies to sectors such as tourism, aviation, engineering, consulting, telecommunications, financial services and other service-based industries generating foreign exchange. The shift removes previous limitations and is expected to strengthen incentives for foreign currency generation while improving business confidence.
The directive also transfers substantial decision-making authority from the central bank to commercial banks, reducing bureaucratic bottlenecks in cross-border financial transactions. Foreign companies can now open foreign currency accounts upon presenting the required investment documents without seeking prior NBE approval. Banks are likewise authorized to approve the remittance of profits and dividends for registered foreign investors, subject to reporting requirements, a move aimed at reinforcing investor confidence.
External loans and supplier credit approvals have also been decentralized. Commercial banks can now process and approve such transactions without direct central bank clearance, provided regulatory requirements are met and transactions are reported periodically to the NBE. The minimum foreign currency requirement for opening FX accounts has been removed, further easing access to the banking system.
In another significant relaxation, the requirement to declare foreign currency amounts exceeding USD 10,000 for exchange at forex bureaus, deposits into FX accounts, or at border entry has been cancelled. Banks are also permitted to issue internationally recognized payment cards and load foreign currency based on customer instruction without requiring proof of visa or ticket. Advance payments of up to USD 20,000 for medical and educational services abroad are now allowed without visa or travel documentation, upon presentation of relevant supporting documents.
The directive further allows resident Ethiopians to remit up to USD 3,000 abroad for family support upon justification, while outward investment by Ethiopian entities is permitted on a case-by-case basis subject to NBE approval.
Taken together, the amendments signal a deeper transition from a tightly administered foreign exchange regime toward a more market-oriented and supervisory model. By introducing forward contracts, expanding foreign currency retention, decentralizing approvals, and easing operational restrictions, the central bank appears to be reinforcing its commitment to developing a more flexible and confidence-driven FX market.
Directive No. FXD/04/2026 enters into force on February 12, 2026.
