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.



Related Posts

Share This Post
Linkedin
Google+


Most read

Latest News

Editor's pick

Commentaries

For Developing Economies, the Finance Landscape Becomes a Wasteland

It was a bold idea encapsulated in a snappy slogan: “From billions to trillions....

Donor Countries Risk Derailing the Global War on Poverty

The world is losing a winnable battle. UN Secretary-General Antonio Guterres warns th...

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

Fueling Reform, the Petroleum Sector Caught Between Monopoly Missteps, Market Liberalisation

Dec 7 , 2024

For decades the Ethiopian Petroleum Supply Enterprise (EPSE), a state-owned giant ent...

Crafting Public Service Reward in a Cash-Strapped Economy

Nov 30 , 2024

In the corridors of government offices worldwide, the question of how much to pay mem...

During Taxing Times, Tax Hunt Tests the Limits of an Unsteady Economy

Nov 23 , 2024

The fiscal puzzle deepens as the Council of Ministers approved a supplementary budget...

Bound by Debt, Government's Costly Love Affair with State Bloat

Nov 16 , 2024

In the realm of public finance, balance sheets speak louder than rhetoric. In such do...

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

Choosing to Lift Up in a Judgmental World

I recently spoke with someone deeply stressed by complex family matters. Her worries...

Beyond the Gates of Society's Neglect

Returning to social media after a three-year hiatus, I anticipated updates from frien...

Life Matters

Navigating Grief with Young Children

It has been several months since my mother-in-law passed away, and we have yet to sha...

Walking on Eggshells in a Social Web

Our choices come with hidden social costs. Sometimes, they are as trivial as deciding...

Back
WhatsApp
Telegram
Email