Enhancements in Ethiopia’s Foreign Exchange Market

At Ds Authorized Accounting Firm, we are committed to keeping our clients informed about significant developments that can impact their financial operations. Today, we are pleased to share crucial updates from the National Bank of Ethiopia (NBE) regarding reforms aimed at enhancing the functioning of the foreign exchange market.

In a bid to further improve market conditions for importers and travelers, the NBE has announced a series of reform measures that align Ethiopia’s foreign exchange pricing practices with global standards. These initiatives follow the successful launch of bi-weekly foreign exchange auctions, which have already provided much-needed liquidity to the banking system.

Since the introduction of the new foreign exchange system in July 2024, Ethiopia has witnessed substantial progress in the foreign exchange market, as well as in the overall balance of payments. Notably, the supply response from the exchange rate reforms has led to a remarkable increase in goods exports—surpassing 100%—along with significant growth in services, remittances, and enhanced capital inflows from both private and official channels. This positive momentum has resulted in record-high foreign exchange reserves at commercial banks and the NBE, improving forex availability and allowing businesses to secure vital inputs and expand operations.

The latest reforms are designed to build on these encouraging trends and further enhance the business environment. Here are the key components of the new measures:

1. Increased Importer Advance Payment Limits: The NBE is raising the advance limit on import payments from USD 5,000 to USD 50,000 per transaction. This change addresses a historical constraint for importers, allowing them more flexibility in providing upfront funds to their foreign suppliers.

• Raised Foreign Exchange Cash Limits for Travelers: To better accommodate travelers, the NBE has revised cash purchase limits for Ethiopians traveling abroad. Personal travelers can now purchase up to $10,000 in foreign exchange cash, while business travelers may obtain up to $15,000. Additionally, individuals with foreign exchange accounts can use up to 20% of their balance (previously 10%) via their debit cards.

• Simplification of Bank FX Fees: To align with global standards, the NBE is directing banks to provide competitive and transparent foreign exchange pricing. Effective May 26, 2025, all fees related to foreign exchange purchases—whether for the import of goods, service payments, or cash purchases—shall not exceed 4%. Furthermore, banks must eliminate any supplementary charges for minor associated services to maintain transparency. Beginning June 2025, FX-related fees will be regularly disclosed on the NBE website.

The NBE is optimistic that these enhancements will foster an active and competitive foreign exchange market that effectively meets the needs of consumers and the private sector in Ethiopia.

At Ds Authorized Accounting Firm, we encourage our clients to stay abreast of these updates, as they may present new opportunities for your business. For any further assistance regarding foreign exchange matters, please do not he sitate to contact us.