Ethiopia and China sign currency exchange agreement to boost economic ties

Ethiopia and China have signed a currency exchange agreement involving the Ethiopian birr and the Chinese yuan, aiming to strengthen their economic ties and business relations.

Ethiopia’s Finance Minister, Ahmed Shide, announced that the central banks of both countries have agreed to collaborate closely to facilitate trade exchanges and enhance financial cooperation.

The agreement was reached during discussions between Ethiopian Prime Minister Abiy Ahmed and Chinese President Xi Jinping on the sidelines of the 2024 Forum on China-Africa Cooperation (FOCAC).

Minister Shide also noted that China has provided Ethiopia with financial assistance amounting to 400 million yuan, a contribution confirmed by President Xi during their talks.

This financial support underscores China’s commitment to bolstering Ethiopia’s economic stability and growth.

The Ethiopian Ministry of Foreign Affairs stated that President Xi Jinping praised Ethiopia’s macroeconomic reforms and acknowledged the country’s efforts to stabilize its economy and promote growth.

These reforms have been a focal point of Ethiopia’s strategy to revitalize its economy amid various domestic and international challenges.

The currency exchange agreement is expected to bolster Ethiopia’s economic stability by reducing its reliance on third-party currencies for transactions with China, thereby simplifying financial operations between the two nations.

This strategic move not only enhances bilateral trade but also reflects a deepening of financial integration, as both countries seek to mitigate currency exchange risks and transaction costs.

This agreement marks a significant milestone in the long-standing diplomatic and economic relationship between Ethiopia and China, further solidifying their positions in the broader framework of China-Africa trade relations.

As China continues to expand its footprint on the African continent, partnerships like this one with Ethiopia highlight the increasing importance of tailored financial cooperation to support mutual economic ambitions.

The deal also underscores Ethiopia’s ongoing efforts to attract foreign investment and strengthen its role as a key player in the region’s economic landscape.

By aligning with China’s Belt and Road Initiative, Ethiopia aims to leverage these partnerships to drive infrastructure development and economic diversification, ensuring sustainable growth for the future.