National Bank of Ethiopia Introduces New Foreign Exchange Rules

The National Bank of Ethiopia (NBE) has announced significant changes to its foreign exchange (FX) trading rules. Since the new FX system started on July 29, 2024, the NBE has been watching how the market performs.

The updated foreign exchange policy of the National Bank of Ethiopia focuses on two main areas: how trading spreads are shown and how fees are disclosed.

Clear Trading Spreads

Banks must now clearly show their FX trading spreads, which is the difference between what they buy and sell currency for. This spread should not usually go over 2%, following international standards. Banks can still change their rates based on market conditions and negotiate openly with their customers.

Transparency in Fees

Banks are also required to list all fees and commissions related to FX transactions separately. This change helps customers understand the costs involved. By following best practices from around the world, banks should set competitive fees and clearly explain any charges. They must also report these fees to the NBE regularly.

These new rules will be effective from October 16, 2024. This gives banks time to adjust their systems and processes.

The NBE’s new policy aims to make the FX market in Ethiopia more efficient. With clearer information about costs, both banks and customers can make better decisions. Customers will know exactly what they are paying for, leading to more trust in the banking system.

Yesterday, the National Bank of Ethiopia (NBE) launched a new foreign exchange online platform called the Foreign Exchanges Monitoring and Orchestration Unified System (FEMoUS). The purpose of FEMoUS is to streamline the operations of foreign exchange.

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