Mamo E. Mihretu, Governor of the National Bank of Ethiopia (NBE), and Khaled Mohamed Balama, Governor of the Central Bank of the UAE (CBUAE), have signed a bilateral currency swap agreement for the UAE Dirham and Ethiopian Birr.
Additionally, the two parties signed two Memoranda of Understanding (MoU) to connect their payment and messaging systems and create a framework for settling cross-border transactions using local currencies.
The agreement permits the CBUAE and the NBE to exchange local currencies up to Dhs3 billion and ETB 46 billion in nominal value. Supplying liquidity in local currencies to financial markets promotes financial and commercial cooperation between Ethiopia and the United Arab Emirates and makes cross-border transaction settlement more effective and efficient.
The first Memorandum of Understanding (MoU) states that the CBUAE and the NBE will work together to encourage the use of their respective currencies for transaction settlement between Ethiopia and the UAE. The MoU contains several provisions that will make it easier to settle business transactions in the local currencies of the two nations.
Additionally, it promotes knowledge-sharing between banks and the financial sector, which helps advance the growth of each industry’s financial markets while easing trade between nations and promoting direct investment.
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