The rapprochement has seen flights resume between Asmara and Addis Ababa and emotion-filled visits by Eritrean President Isaias Afwerki and Ethiopian Prime Minister Abiy Ahmed.
One week ago the leaders declared their "state of war" over and Isaias spent the weekend in Ethiopia.
Eritrea’s President Isaias Afwerki said both nations would work together to safeguard the newfound peace that’s ended nearly two decades of frosty relations between the neighbouring nations.
Recent events have helped to reunite families living in the two countries.
On Monday, Ethiopia and Eritrea declared an end to their state of war and agreed to open embassies, develop ports and resume flights between the two countries after decades of hostilities.
The dramatic announcement of an end to the "state of war" between the neighbours came at the climax of a two-day visit to Eritrea by Ethiopia's reform-minded Prime Minister Abiy Ahmed.
After decades of their countries not being on good terms, Abiy Ahmed of Ethiopia and Isaias Afwerki of Eritrea agreed to reopen embassies in each other's respective countries.
Ethiopia removed three opposition groups from its list of "terrorist" organisations on Thursday.
Leaders encouraged the movement of people back to their homes after initial fighting, but to no avail.
The dead included three Ethiopians and two Sudanese.
Ethiopian leader Abiy Ahmed said this month he would honour all the terms of a peace deal, suggesting he might be ready to settle the border dispute.
Most of the violence in the Benishangul-Gumuz Region has occurred in its capital of Assosa.
Olympic athletes, singers, actors and religious leaders were also at the airport where Eritrean Foreign Minister Osman Saleh and other top officials were presented with garlands of flowers.
Thirty people have been arrested on suspicion of involvement in the attack that killed two and wounded 156 in Addis Ababa's packed Meskel Square. Nine police officers have also been detained over the security lapse, officials said.
The attack in Addis Ababa injured over 150.
The attack was launched by an unidentified assailant moments after 41-year-old prime minister, a former soldier who took office in April, finished his speech to tens of thousands of people gathered in Meskel Square in the centre of Addis Ababa.
On Wednesday, Eritrean President Isaias Afwerki raised hopes of a breakthrough in the conflict by describing recent peace overtures from Ethiopia as "positive signals."
Relations between Eritrea and Ethiopia have gradually been improving.
Kiir and Machar are due to meet later on Wednesday. It will be the first between the two since a peace deal between the government and Machar's rebel group fell apart in August 2016.
The announcement was the first clear signal that Prime Minister Abiy Ahmed, who came to power in April promising a "new political beginning", would implement real economic reforms.
Prime Minister Abiy Ahmed said that he wanted to increase Ethiopia's naval force capacity.
Andargachew Tsige was among hundreds of prisoners pardoned last week.
Ethiopia also announced that Saudi Arabia had agreed to release 1,000 Ethiopian citizens who have been in prison there for a variety of offenses.
The director of the Dangote Industries Limited plant was killed while he was returning to Addis Ababa from the factory alongside two company employees.