Executive summaryThe National Bank of Ethiopia (NBE) on 29 July 2024 announced (in Directive No. FXD/01/2024) (the Directive)a reform of the foreign exchange regime with immediate effect. The reform introduces a competitive, market-based determination of the exchange rate and addresses a long-standing distortion within the Ethiopian economy.The Directive involves significant policy changes in the areas listed in this Alert.Policy changes1. Shift to a market-based exchange regimeBanks will be allowed to buy and sell foreign currencies from/to their clients and among themselves at freely negotiated rates. The NBE will make only limited interventions to support the market in the regime's early...