The National Bank of Ethiopia (NBE) issued a new circular on foreign exchange transactions numbered FEMRMD/0585/2024, effective August 3, 2024, which was aimed at increasing transparency in the foreign exchange market.
A key aspect of the circular is the prohibition of additional fees or commissions on foreign exchange sales by banks, except for nominal charges related to Letters of Credit, payment methods, and invisible transactions. Nevertheless, the circular states that NBE would continue to collect its existing exchange commission through banks as per current practices.
NBE does not impose specific limits on the spreads between buying and selling rates, thus encouraging a competitive market environment. However, the NBE expects banks to avoid any collusive behavior in setting these rates. For any charges that are set as a percent of the transaction value (when selling foreign exchange), NBE stated that banks should include such charges in the spread between their buying and selling rates.
According to the Circular, these new guidelines are part of the broader transition to a more transparent foreign exchange rate system. They are designed to ensure fair practices and transparency in handling foreign exchange transactions across all banks.
Source: Sheger FM 102.1 and NBE Circular No. FEMRMD/0585/2024
