The private sector, which includes companies in the industrial sector, is pleased with the banking institutions’ improved foreign exchange allocation.
According to sources, private sector players report that their requests for foreign currency are being met with favorable and somewhat quick responses from banks, in contrast to their prior experience.
“Over the past few weeks, our letter of credit (LC) has been receiving positive results,” they stated.
Manufacturing investors, who have been grumbling for years about their companies’ terrible hard currency allocation, now report that things have improved in the last few weeks.
They conveyed their optimism that the foreign exchange allotment will increase in the upcoming time frame.
Important adjustments to the foreign exchange directive have been made by the government in connection with the macroeconomic reform that went into effect on July 29.
The market has considerably reduced the difference in exchange rates between the legal and black markets, setting the direction of the foreign exchange market, according to the ruling.
The National Bank of Ethiopia (NBE) has dramatically altered the administration and distribution of foreign currency, enabling banks to generate and distribute foreign currency freely through a new directive that updated numerous earlier rules and included some new legislation.
The money transfer that was greatly impacted and captive to the parallel market and money laundering has also been made possible by the currency market reform and is now being routed through the legal system, according to banking sector observers.
Financial sector experts noted that the banking system has seen an exceptional increase in remittances over the last several weeks.
They told Capital that the amount of foreign cash received through remittances via the legal system during the last three weeks, which coincide with Ethiopia’s New Year and Meskal holiday season, is noteworthy.
A few weeks ago, NBE launched a six-month campaign to increase money transfers in partnership with financial institutions.
“The foreign currency flow through banks is growing since the foreign exchange has become equal to the illegal market, and financial institutions are offering various attractive incentives to boost their hard currency resources,” an IBD director told Capital.
He continued by saying that some of the incentives are better than the black market pricing, which, according to the most recent NBE review, differs somewhat from the legal rate.
“It may take two weeks, but our foreign currency requests are getting positive responses from banks,” said participants in the private sector.
“We hope that it will expand more in terms of amount and shorter time frames,” they said, expressing their appreciation for the new trend.
According to the government, the new reform is primarily intended to modernize the macroeconomic structure and increase foreign currency availability, which was one of Ethiopia’s biggest economic concerns.
