Ethiopia has launched an automated interbank foreign exchange trading platform, replacing decades of fragmented, relationship-driven currency dealing with real-time electronic transactions.
The reform places Africa’s second most populous nation alongside Kenya, Nigeria and Ghana, which have already digitised parts of their interbank foreign exchange markets to improve transparency, efficiency and regulatory oversight.
For Ethiopia, where chronic foreign currency shortages and administrative controls have long distorted price signals, the move marks a deeper commitment to market-based reform.
The platform was introduced by the National Bank of Ethiopia (NBE) and operationalised through the Ethiopian Securities Exchange (ESX) automated trading system. It allows licensed commercial banks to “quote, match and settle” foreign exchange trades electronically, creating a centralised venue where exchange rates are formed through competitive bidding rather than bilateral negotiation.
At the launch in Addis Ababa, attended by commercial banks and financial sector stakeholders, NBE Governor Eyob Tekalign described the system as a structural upgrade to Ethiopia’s foreign exchange market.
“Today’s demonstration marks an important step in modernizing our foreign exchange market infrastructure,” he said. “The Interbank FX Automated Trading Platform provides a transparent, efficient, and rules-based environment for all market participants. Its adoption will help strengthen market discipline, improve price discovery, and support the broader financial sector reform agenda.”
Under the new system, participating banks log into a secure electronic platform to submit bids and offers in real time. Trades are matched automatically, allowing the interbank exchange rate to reflect supply and demand dynamics in the wholesale FX market. Officials say this provides a reliable benchmark for broader price formation while reducing information asymmetry across the banking sector.
For years, Ethiopia’s foreign exchange market has been constrained by limited liquidity, multiple exchange-rate practices and administrative allocation mechanisms.
Those conditions have left banks, exporters and investors navigating opaque pricing and delayed access to hard currency. Authorities say the automated platform is designed to “deepen the market” by allowing foreign currency to circulate more efficiently within the banking system.
Rules, technology and oversight
The interbank FX market operates under the market-based exchange regime established in Foreign Exchange Directive FXD/01/2024, alongside exposure limits for banks and the NBE’s FX Market Guidelines and Code of Conduct. Officials say these rules are intended to ensure orderly trading while containing risk in a market that remains sensitive to external shocks.
Technologically, the platform runs on ESX’s state-of-the-art trading infrastructure, with a dedicated foreign exchange segment. The unified system gives all participating banks equal visibility into prices and market depth, while enabling the central bank to supervise transactions in real time. Regulators say this improves policy transmission and enhances the credibility of the market mechanism.
The NBE has argued that electronic trading will also strengthen compliance, reduce the scope for preferential access and improve confidence among market participants, particularly exporters and investors who rely on predictable pricing and timely settlement.
As African economies increasingly adopt digital market infrastructure to strengthen financial governance, Ethiopia’s move “signals a shift” from administrative control toward managed market competition.
How quickly liquidity deepens and confidence builds will determine whether the platform delivers on its promise to reshape one of the country’s most sensitive and strategic markets.
