• National Bank of Ethiopia will open four new regional branches.

• Branches planned in Bahir Dar, Hawassa, Jimma, and Dire Dawa.

• Project aims to strengthen regional supervision and service delivery.

• Construction and preparatory works have already started.

• Implementation has faced delays from material shortages and site issues.

• National Bank of Ethiopia is coordinating with regional administrations.

Why it matters?
The expansion increases National Bank of Ethiopia’s regional presence, affecting banks, microfinance institutions, and financial supervision across major commercial centers.

• IMF extends deadline for Commercial Bank of Ethiopia (CBE) to cut net open position (NOP) to March 2026 from end-2025.

• CBE must reduce on-balance sheet NOP by at least 50 % under extended compliance timeframe.

• CBE’s short FX position worsened to about -$500 m from -$200 m year-on-year.

• National Bank of Ethiopia (NBE) and CBE hold weekly consultations on revised NOP plan.

• CBE launches diaspora remittance campaigns and tailored loan products to boost FX inflows.

• Asset Quality Review of CBE lending portfolio due by end-June 2026.

• NBE’s updated NOP directive sets FX exposure limit at ±18 % of a bank’s Tier 1 capital.

Why it matters?
Ethiopia’s largest bank must meet IMF-agreed FX risk limits by March 2026, reflecting weaker remittances and private sector FX demand. Progress influences foreign exchange market functioning and CBE balance sheet risk compliance.

• National Bank of Ethiopia targets full removal of the bank credit growth cap by December 2026.

• Credit cap currently limits annual bank lending growth to 24 percent.

• Policy shift follows improved macroeconomic conditions and ongoing monetary policy reforms.

• NBE plans a gradual and sequenced exit from the credit cap framework.

• Reform aligns with transition toward market-based monetary policy tools.

• Credit cap was introduced to control inflation and manage excess liquidity.

Why it matters?
The timeline signals regulatory predictability for banks and borrowers. It clarifies when credit allocation will fully shift to market-based mechanisms under NBE oversight.

• Imports may rise through expanded trade finance and letters of credit, conditional on foreign exchange availability.

• Exports may increase via improved pre- and post-shipment financing for exporters.

• National Bank of Ethiopia plans to allow unlimited deposits of legally earned foreign currency in commercial banks.

• Policy targets individuals and entities earning foreign currency through legal channels.

• Reform aims to ease foreign exchange constraints affecting importers and exporters.

• NBE governor Eyob Tekalign presented the measure during the central bank’s six-month performance report to parliament.

• NBE conducted biweekly foreign currency auctions, collecting ETB 1.3 trillion in the first half of the fiscal year.

• Parliamentary committee raised concerns on credit supply, trade imbalance, and monitoring foreign exchange demand.

  Why it matters?

  The measure could increase formal foreign currency inflows into the banking system.
  It may support import financing, export operations, and foreign exchange availability.

• National Bank of Ethiopia’s 17th FX auction cleared at 155.05 birr per USD. 

• NBE allotted USD 70 million to banks from total bids of USD 127.25 million. 

• Weighted average rate of successful bids was 155.0506 birr per USD. 

• Accepted bid rates ranged from 154.8141 to 155.0519 birr per USD. 

• 19 commercial banks participated; 8 secured foreign exchange. 

• Clearing rate was slightly weaker than previous 154.82 birr per USD auction. 

• Next FX auction scheduled under NBE’s biweekly calendar. 

Why it matters?

The  successive FX auctions set the official dollar price for commercial bank allocations, affecting import financing costs and formal FX market liquidity. It signals ongoing birr exchange rate adjustments under Ethiopia’s auction-based FX management.

• National Bank of Ethiopia announced a $70 million foreign exchange auction on Tuesday, February 3. 

• Auction follows an oversubscribed previous FX sale. 

• Commercial banks will participate in the FX auction. 

• Bidding window schedule for banks was specified. 

• Auction is part of the central bank’s continuing hard currency allocation operations. 

why it matters?
The planned $70 million FX auction reflects ongoing National Bank of Ethiopia efforts to supply hard currency and address high demand in Ethiopia’s foreign exchange market.

The National Bank of Ethiopia (NBE) enacted targeted measures in response to a recent surge in the parallel foreign exchange market, which saw the informal USD/ETB rate spike. The actions include a large unscheduled USD auction and a new directive tying import foreign exchange allocations to customs valuation benchmarks, aimed at stabilizing the currency and discouraging informal trading.

Key Takeaways:

• Forex spike: Parallel forex rates reached as high as 190 birr per dollar, above official rates below 160 birr.

• Large FX injection:  USD 500 million  was injected via a special forex auction to meet heightened demand.

• New directive: Banks must use Ethiopian Customs Commission valuation data when issuing forex for imports.

• Objective: Measures target illegal/parallel forex activity and enhance consistency in forex valuations.

• Reform context: Steps align with ongoing post-2024 forex market reforms and market-clearing exchange rate systems.

  
  

Why It Matters:

The National Bank of Ethiopia (NBE) plans to exit the gold purchasing and export market by December 2026, ending its monopoly and opening the sector to private banks, according to the IMF’s Fourth Review. This shift follows sustained financial losses and market distortions attributed to NBE’s premium-based gold purchases. 

Key Takeaways:

• Policy change: NBE will cease gold market operations by end-December 2026. 

• Market entry: Private banks will be permitted to buy gold domestically post-exit. 

• Cost issue: NBE’s prior 15 % premium above international prices led to losses and balance-sheet strain. 

  
  

Why It Matters:

• Interbank FX market opened: Ethiopia’s central bank has launched a competitive interbank foreign exchange market with real-time pricing. 

• Market pricing: Banks conduct FX trades through competitive bids, enhancing price discovery and transparency. 

• Regulated oversight: The National Bank of Ethiopia (NBE) keeps strict supervision and guidelines over the new trading platform. 

• Platform tech: The market uses an automated trading system (ESX) for efficient transaction execution. 

• Policy change: This move aligns with Ethiopia’s broader market-based FX reforms since 2024. 

Why it matters:
Opening an interbank FX market marks a significant step in Ethiopia’s transition toward market-based foreign exchange pricing, helping align official pricing with market dynamics. This can improve liquidity allocation among banks and provide more reliable benchmark rates for the broader financial and business community.

• Auction size: National Bank of Ethiopia sold USD 500 million in its largest single foreign exchange auction to date. 

• Exchange rates: Weighted average clearing rate was 154.82 birr per USD with bids between 153.50–154.998 birr. 

• Demand: Total bids reached USD 592.3 million, exceeding supply by over USD 92 million. 

• Participation: 31 banks bid in the auction, 25 securing foreign currency allocations. 

• Policy context: Auction mechanism remains central to Ethiopia’s market-based FX regime post-2024 reforms. 

Why it matters:
This record forex auction reflects active implementation of Ethiopia’s market-based foreign exchange policy and provides significant hard currency liquidity to the banking sector. Exchange rate discovery and allocation outcomes inform pricing and liquidity conditions for imports and financial planning across institutions.