UAE and Ethiopia swap their currencies, interlink their payment platforms

The United Arab Emirates (UAE) and Ethiopia have signed an agreement that will allow the two countries to swap currencies for cross-border commerce.

On Tuesday, The Central Bank of the UAE (CBUAE) governor Khaled Mohamed Balama, and the National Bank of Ethiopia (NBE) governor Mamo Mihretu signed a bilateral currency swap of the UAE Dirham and Ethiopia Birr.

The new agreement will see the two countries swap the currencies with a nominal value of up to AED 3 billion and ETB 46 billion.

The two governors also entered into a Memoranda of Understanding (MOU) to enable the two countries to use their local currency to settle payments and interlink their payment and messaging systems.

Under the first MoU, the two countries will see the CBUAE and NBE consolidate efforts to promote using their respective currencies to settle transactions between UAE and Ethiopia.

In the second MoU, Ethiopia and UAE will cooperate in their payment platforms. Both parties will interlink their instant payment systems, the national card switches UAESWITCH and ETHSWITCH, and messaging systems per the regulatory requirements of each country, in addition to cooperation in the field of financial technology and central bank digital currencies.

The CBUAE governor said the move to swap the currencies will expand business opportunities between the two nations in the financial and banking sectors. He revealed plans to work closely with Ethiopia to ensure they both achieve economic stability.

"Swapping the countries of the two nations and utilizing local currencies to settle cross-border transactions and enhancing the cooperation of interlinking instant payment systems will enhance economic, trade, and investment prospects," Balama said.

Ethiopia termed the signing of MoUs and the bilateral currency swaps as an indication of the two countries' commitment to strengthening their partnership.

"UAE is one of the greatest trading partners and a significant source of foreign investment and development. The currency swap arrangement provides an important funding opportunity for Ethiopia," Mihretu said.

Mihretu affirmed that the move will help Ethiopia facilitate its growing trade activities in the coming years now that they have a wide range of currencies.