UAE and Ethiopia Sign Historic Currency Swap Agreement

Khaled Mohamed Balama, Governor of the Central Bank of the UAE (CBUAE), and Mamo E. Mihretu, Governor of the National Bank of Ethiopia (NBE), have signed a landmark bilateral currency swap agreement.

This agreement involves the UAE Dirham and the Ethiopian Birr and is valued at AED 3 billion and ETB 46 billion respectively.

Alongside the swap agreement, two crucial Memoranda of Understanding (MoU) were signed to establish frameworks for using local currencies in cross-border transactions and linking the countries' payment and messaging systems.

The currency swap will enhance financial and commercial cooperation between the UAE and Ethiopia, providing local currency liquidity to financial markets and streamlining the settlement of cross-border transactions. Under the first MoU, both banks will encourage the use of their currencies for settling bilateral transactions, facilitating smoother commercial exchanges and promoting financial market development. This includes measures to bolster financial and banking cooperation through knowledge-sharing, ultimately supporting bilateral trade and investment.

The second MoU focuses on integrating payment platforms and electronic switches. This includes linking their instant payment systems, national card switches (UAESWITCH and ETHSWITCH), and messaging systems, adhering to each country's regulatory requirements. It also covers cooperation in financial technology and central bank digital currencies.

Khaled Mohamed Balama emphasized the importance of this agreement, stating,

“The bilateral currency swap agreement and the MoUs signed today reflect the robust economic cooperation between the UAE and Ethiopia. This initiative will pave the way for joint business opportunities in the financial and banking sectors, enhancing economic, trade, and investment prospects."

Mamo E. Mihretu echoed this sentiment, highlighting the UAE as one of Ethiopia’s largest trading partners and a significant source of foreign investment. He noted,

“The currency swap arrangement provides an important funding opportunity for Ethiopia and helps diversify the range of currencies at its disposal, facilitating the growing volume of trade and investment transactions expected over the coming years. These agreements are a testament to our commitment to deepen our bilateral partnership for sustainable development and a prosperous future.”

News Source: Emirates News Agency