FORTUNE+ VIDEO SPONSORED CONTENTS ADVERTORIALS FORTUNE AUDIO Fortune Careers New TRADE AFRICA New

Fortune Logo

Central Bank Caps Forex Trading Spreads at Two Percent, Tightens Fee Disclosures

Oct 15 , 2024

The National Bank of Ethiopia (NBE) has revised its foreign-exchange policies, imposing a cap on currency trading spreads and compelling commercial banks to separately disclose foreign-exchange fees and commissions. In a statement its officials issued today, they disclosed their intentions to align "banking practices with global standards and enhance transparency in the foreign-exchange market."

Under the new directive, banks are to identify foreign-exchange trading spreads in their daily posted rates, with the spread not exceeding two percent, from an average of 11.2pc over the past one month.

Previously, the Central Bank, had mandated that all foreign-exchange–related fees and commissions, excluding nominal charges, be included within the trading spread between a bank's buying and selling rates. However, regulators have reconsidered this approach, mandating banks to disclose foreign exchange related fees and commissions separately and report any changes to the Central Bank.

"They are encouraged to adopt international best practices in setting these fees to ensure they remain competitive," said the statement.

The policy changes come during the Central Bank's struggle to stabilise the foreign exchange market in the face of Birr's ongoing devaluation. Measures have included foreign-exchange auctions and the injection of 175 million dollars, particularly targeting at securing fuel imports.

The Central Bank has also issued forex bureau licenses to non-bank operators, further opening up the market and increasing competition.

However, industry observors see today's measure in narrowing the spread as constraining commercial banks' profit margins, especially since they are restricted from charging certain commission fees.

With net interest margins under pressure due to credit caps and existing liquidity crunches, banks could face tough times ahead.

Put your comments here

N.B: A submit button will appear once you fill out all the required fields.



Related Posts

Share This Post
Linkedin
Google+


Most read

Latest News

Editor's pick

Commentaries

Stale Exchange Rates Hide Costs During Debt-for-Equity Conversions

Companies hungry for cash face a familiar choice of either borrowing and repaying wit...

Flower Export Reforms Put Vital Partnership on the Test

A long-overdue update to the floriculture export regime is taking effect, but it arri...

Fineline

Leaders of the National . . .

Leaders of the National Election Board are in a charm offensive mood, of a sort. Last week, they organised a rare tour for members of the me...

When the country’s most. . .

When the country's most senior diplomats and envoys return back to their posts after two-week debriefings, they leave behind a point or two...

Editorial

The Human Flight a Failure of Political Imagination, Not a Mere Economic Policy

Oct 11 , 2025

Ladislas Farago, a roving Associated Press (AP) correspondent, arrived in Ethiopia in...

Central Bank Loosens Credit Reins But Stops Short of Bold Overhaul

Oct 4 , 2025

Eyob Tekalegn (PhD) had been in the Governor's chair for only weeks when, on Septembe...

Exam Policy Fails the Test of Justice, Deepening Inequality, Disillusion

Sep 27 , 2025

Four years into an experiment with “shock therapy” in education, the national moo...

Addis Abeba's Setback Rules Leave Homes Flattened, Voices Silenced

Sep 20 , 2025

Getachew Reda's return to the national stage was always going to stir attention. Once...

Gallery

Parliament Approves New Cabinet Members

Oct 6 , 2021

Parliament Approves New Cabinet, Incorporates Opposition Leaders Lawmakers have approved today the nominations of 22 ministers, including three opposition leaders. Two MPs have voted against, while 12 abstained...

2020 in Posterity

Jan 5 , 2021

TIGRAY VOTES DESPITE "NULL & VOID" THREAT

Sep 9 , 2020

IN-PICTURE: LAUREATE'S RECEPTION  

Dec 14 , 2019

PM Abiy Ahmed (PhD) at a Gala Dinner Called for the Awarding of the Félix Houphouët-Boigny Peace Prize

May 6 , 2019

Faces, Voices of Addis Abeba

Apr 26 , 2019

Sunday With Eden

The Power of Staying Unexplainable

There's a version of us that lives in our parents' minds, the child they raised, frozen in time no matter how old we get. Another version ex...

Arrivals, Departures, and the Human Heart

Airports are not just hubs of transportation. They are emotional crossroads, places where laughter welcom...

Life Matters

The Savior Complex, When Helping Hurts

I have this one friend who absolutely amazes me. She's fiercely loyal, always trying to help, and practic...

When the Price of Survival Becomes the Ultimate Luxury

From daily observations I can no longer ignore, one truth has become impossible to shake: the very struct...