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.”

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.