Ethiopia frees its currency to attract investors, spur growth

Ethiopia allowed its currency to trade freely in a bid to attract investors as it awaits a bailout from the International Monetary Fund.

The National Bank of Ethiopia permitted banks to buy and sell foreign currency at freely negotiated rates, according to a directive on its website. The central bank will make “only limited interventions to support the market in its early days and if justified by disorderly market conditions.”

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The Horn of Africa country has had a managed floating exchange rate system that’s caused a shortage of dollars critical for imports and the repatriation of profits for foreign investors. The government is in talks with the IMF and the World Bank to unlock $10 billion of financing.

An IMF team is expected to discuss Ethiopia’s request for a new financing program on Monday, Bloomberg News reported on July 25.