Ethiopia’s latest foreign exchange auction has recorded a weighted average bid of 158 birr per US dollar, as the central bank continues efforts to support the country’s currency market under ongoing economic reforms.
The National Bank of Ethiopia (NBE) said the latest auction, held on Tuesday after a postponement last week, attracted bids from 16 commercial banks, with the average successful rate settling at 158 birr against the dollar.
The auction marked the 23rd foreign currency sale conducted by the central bank since August 2024, when Ethiopia introduced the mechanism as part of broader economic reforms supported by an International Monetary Fund (IMF) programme.
A total of US$100 million was offered during the latest auction, with eight commercial banks securing foreign currency allocations. The lowest successful bid was recorded at 157.99 birr per dollar.
The amount offered represents a significant reduction from the previous auction, where the NBE made $500 million available to commercial banks.
The foreign exchange auctions are part of Ethiopia’s efforts to improve access to hard currency, strengthen market-based exchange rate mechanisms and address long-standing foreign exchange shortages that have affected businesses and importers.
The reforms follow a major shift in Ethiopia’s exchange rate policy as authorities seek to create a more flexible foreign exchange market, attract investment and restore macroeconomic stability.
The country has faced persistent pressure on foreign currency reserves due to high import demand, debt challenges and economic disruptions linked to years of conflict and global commodity price shocks.
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The NBE’s interventions through forex auctions are intended to provide liquidity to the banking sector while gradually moving towards a more transparent and market-driven exchange rate system.
However, the reduced allocation in the latest auction compared with previous rounds could raise concerns among businesses that rely on imported goods and raw materials.
Ethiopia’s government has prioritised economic reforms aimed at improving foreign exchange availability, boosting exports and encouraging private sector participation in the economy.
The IMF has supported these measures as part of efforts to stabilise Ethiopia’s economy, reduce distortions in the foreign exchange market and improve financial sector conditions.
The birr has experienced significant pressure in recent years, with authorities attempting to balance currency market reforms with the need to control inflation and protect economic stability.
The latest auction results come as Ethiopia continues efforts to attract foreign investment, expand exports and strengthen economic growth following a period of major economic challenges.
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Analysts say the sustainability of the foreign exchange reforms will depend on improving export earnings, increasing foreign investment inflows and maintaining confidence in the country’s economic policy direction.
