Ethiopia has granted foreign exchange licenses to five companies allowing them to operate as independent currency exchange houses, the central bank said on Monday, as the Horn of Africa nation adjusts to a floated birr currency.
The National Bank of Ethiopia said in a statement that Dugda Fidelity Investment, Ethio Independent Foreign Exchange Bureau, Global Independent Foreign Exchange Bureau, Robust Independent Foreign Exchange Bureau, and Yoga Forex Bureau had all met licensing requirements.
Officials hope regulated currency exchange points will help citizens and companies adjust to the new floating birr regime following decades of a managed exchange rate.
"These new bureaus will play an important part in further developing and deepening Ethiopia's foreign exchange market through their role in the buying and selling of cash notes of major convertible currencies," the central bank said.
Until end of July 2024, the central bank tightly controlled Ethiopia's exchange rate, maintaining an overvalued birr. But it allowed the currency to float, leading to a near-95 percent depreciation that has accelerated inflation. The new bureaus will buy and sell major foreign currencies like dollars and euros for cash. Commercial banks currently dominate the formal forex market in Ethiopia.
The bureaus are restricted to the retail forex sector and cannot engage in trade-related activities like letters of credit. Transactions must be settled immediately on a spot basis. By law, they can purchase up to 10,000 dollars in cash from individuals without customs documents or sell travelers up to 5,000 or 10,000 dollars respectively for personal or business trips with ID.
