The UAE Central Bank has partnered with the National Bank of Ethiopia to establish a bilateral currency swap agreement, aimed at enhancing financial and commercial cooperation between the two countries.

This agreement will provide liquidity in local currencies, facilitating the settlement of cross-border transactions between the Emirates and Ethiopia. The pact allows for the exchange of their local currencies up to a limit of Dh3 billion (USD 817 million) and Birr 46 billion.

A currency swap involves exchanging principal and interest payments on loans made in different currencies. The countries also signed two agreements to use local currencies for cross-border transactions and to link their payment and messaging systems. The first agreement promotes the use of their own currencies, encouraging financial cooperation and market development. The second agreement focuses on integrating payment platform services, electronic switches, and messaging systems, adhering to each country's regulatory requirements.

The initiative will boost economic, trade, and investment opportunities, according to Khaled Balama, Governor of the UAE Central Bank. It also sets the stage for joint business ventures in the financial sector.

The currency swap provides Ethiopia with important funding opportunities and diversifies its currency resources to support growing trade and investment. Mamo Mihretu, Governor of the National Bank of Ethiopia, highlighted the agreements as a testament to the countries' commitment to deepen their partnership and support sustainable development and prosperity.

In 2022, the UAE’s non-oil exports to Ethiopia were USD 210.3 million, covering pharmaceuticals, chemicals, and food industries. The countries collaborate in agriculture, finance, culture, tourism, and technology.

Source: National Bank of Ethiopia

Additional source (including image): The National