The announcement came after the government introduced a comprehensive macroeconomic reform policy with revision of the country’s foreign exchange (FX) system effective immediately.
Accordingly, banks are now permitted to buy and sell foreign currencies from and to their clients and among themselves at freely negotiated rates.
The central bank stated it will make only limited interventions to support the market in its early days and if justified by disorderly market conditions.
In the wake of the announcement, there was a noticeable rise in the foreign exchange rate.
As of Monday, the Commercial Bank of Ethiopia reported a buying rate of 74 and a selling rate of 76 birr per 1 USD, showing a 30 percent depreciation within a day.
“The macroeconomic reform policy aims to correct foreign exchange distortions and solve the structural balance of payment deficit, reduce inflation by modernizing the monetary policy frameworks,” said a statement issued Sunday by the office of the Prime Minister of Ethiopia.
MG/abj/APA