Ethiopia plans to introduce a floating exchange rate for birr

Ethiopia plans to start setting a central bank benchmark interest rate and to introduce a floating exchange rate, according to the National Bank of Ethiopia Governor Yinager Dessie.

“In the next three years, we will work toward a market-driven interest rate that can truly be used as a monetary policy instrument,” Yinager said Monday on state-affiliated Fana Broadcasting Corp. The central bank’s plan forms part of reforms Prime Minister Abiy Ahmed’s administration is rolling out to boost investment and continue strong economic growth.

The banking system has a minimum deposit rate, currently 7%, while the lenders set their own loan prices without a benchmark reference. Still, most rates are negative with inflation that was at 21.6% in June. […] CONTINUE READING