Ethiopia Implements Flexible Exchange Rate Policy To Stabilize Economy

People are reflected on an electric screen displaying Japanese Yen exchange rates against the U.S. dollar and other foreign currencies at a currency exchange shop in Tokyo

Following the implementation of a flexible exchange rate policy by the National Bank of Ethiopia, the country's currency experienced a significant devaluation of 30% against major foreign currencies. This move, supported by the International Monetary Fund, aims to address long-standing economic distortions and promote market-based determination of exchange rates.

Under the new policy, commercial banks now have the authority to set foreign exchange rates, marking a departure from decades of government-fixed prices. Additionally, non-bank entities are permitted to operate forex bureaux for the first time, signaling a historic shift in Ethiopia's economic landscape.