National Bank of Ethiopia Conducts Special Foreign Exchange Auction: One USD Sold at 107.9 Birr
The National Bank of Ethiopia (NBE) announced the results of a special auction held to sell US dollars to local banks.
In today’s auction, 27 banks submitted their desired USD amounts and bid prices. The NBE’s statement indicated that the average purchase price offered by the banks for one US dollar was 107.9 Birr.
The auction is expected to influence the daily foreign exchange rates issued by banks.
Governor of the National Bank of Ethiopia, Mamo Mehretu, noted that the gap between official bank rates and black market rates has been narrowing in recent days.
Announcing the auction results, Mr. Mehretu stated that this development would bring stability to the foreign currency market.
He also explained that the macroeconomic reforms aim to channel all foreign currency transactions through the banking system.
Mr. Mehretu highlighted that the current reform efforts are designed to alleviate the challenges faced by importers and other businesses in need of foreign currency.
He emphasized that the banks’ responses to foreign currency requests from their importing customers have been encouraging since Ethiopia transitioned to a market-driven exchange rate.
Today marked the first time Ethiopia held a special foreign exchange auction. This procedure allows central banks to buy or sell foreign currency from commercial banks.
It is believed that the auction will help ease pressure on the foreign exchange market and narrow the disparity between exchange rates at private and government banks.
The NBE has announced that it may conduct more foreign currency auctions in the coming weeks, depending on market conditions.
Today is the 10th day since Ethiopia implemented the market-driven foreign exchange rate, resulting in an increase of over 40 Birr in the USD exchange rate.
Currently, one US dollar is being bought at banks for over 100 Birr and sold for 110-115 Birr.
Ethiopia’s economy faces multiple challenges, including the aftermath of the war, the COVID-19 pandemic, climate change, rising living costs, and international pressures.
In the 2023/24 fiscal year, Ethiopia aimed to earn $4.8 billion from exports but fell short by $1 billion.
According to the Ministry of Trade and Regional Integration, the country earned $3.8 billion from exports, missing the target by $1 billion.
