The National Bank of Ethiopia (NBE) has recently made a significant announcement regarding its new policy on foreign exchange (FX) trading spreads and fees. This new policy comes as a result of the bank’s continuous review of the FX market performance since the transition to a new FX regime on July 29, 2024.
In the press release issued by NBE, it was stated that the bank has been actively addressing emerging issues and challenges in the FX market environment based on consultations with the industry and lessons learned from the initial experience with the new regime. One of the key changes introduced by NBE is the separate identification of the foreign exchange trading spread in banks’ FX transactions and daily posted rates.
According to the new policy, banks are now required to disclose the difference between their buying and selling rates as the trading spread, with a cap of 2 percent for banks’ posted rates. This move aligns with international norms and aims to ensure transparency and fairness in FX transactions. Additionally, FX related fees and commissions must be clearly disclosed, reported, and charged to bank clients, following international best practices.
Banks are also mandated to transparently disclose all fees, commissions, or any other related charges to customers and report these fees to NBE regularly. These changes are set to be effective immediately from the date of the announcement, ensuring that banks comply with the new regulations by Wednesday, October 16, 2024.
This new policy by NBE is expected to promote greater transparency, fairness, and competitiveness in the FX market, benefiting both banks and customers. By aligning with international standards and best practices, NBE aims to enhance the overall efficiency and integrity of the FX trading environment in Ethiopia.
Overall, this development signifies the NBE’s commitment to continuously improving the FX market and addressing challenges in a proactive and consultative manner. It is a positive step towards creating a more robust and competitive FX market that operates in line with global standards and practices.