National bank reports rising exchange rate as it offers $150 million to ease forex crunch.
KEYIR NEWS - The National Bank of Ethiopia (NBE) reported today that the average exchange rate for the latest foreign currency auction has surpassed 138 birr per US dollar, signalling continued pressure on the country’s forex market.
In the twelfth round of competitive auctions conducted this fiscal year, the NBE disclosed that the average winning bid reached 138.2555 birr, reflecting a further depreciation of the Ethiopian currency.
A total of 28 commercial banks participated in the session, during which the central bank made $150 million available, tripling the $50 million offered in its previous auction just one month ago.
At the time of the eighth round in July, the average exchange rate stood at 136.62 birr per dollar, already a record then. The latest figures underscore growing demand for hard currency among importers and commercial banks, as Ethiopia grapples with persistent foreign exchange shortages and macroeconomic adjustments.
The NBE’s foreign exchange auction system, reintroduced in 2023 as part of a broader economic reform programme, is intended to promote transparency in forex allocation and gradually transition towards a more market-based exchange rate regime.
Analysts say the surge in the average bid price is indicative of rising inflationary pressure, import demand, and structural imbalances in Ethiopia’s external sector.
The widening gap between the official and parallel market rates remains a cause for concern. While today’s auction averages just over 138 birr, black-market rates are reportedly far higher, a discrepancy that complicates efforts to stabilise the economy and attract foreign investment.
Despite these challenges, the central bank insists the auction mechanism is helping allocate scarce forex more efficiently while gradually aligning official rates with market realities.
The increase in auction size, from $50 million to $150 million, may also reflect government efforts to prioritise critical sectors such as fuel, pharmaceuticals, and manufacturing inputs, which have been hit hard by forex constraints.
By JEMAL YIMAM | KEYIR STAFF WRITER