ADDIS ABABA—The National Bank of Ethiopia took decisive action on Thursday, selling
dollars to commercial lenders in a bid to bridge the widening chasm between official and
parallel exchange rates.
The central bank executed the sale at an average rate of 107.9 birr per dollar, a figure
notably stronger than the 120 to 122 birr range observed on the parallel market just a day
prior.
Until recently, unofficial rates had surged to nearly double those offered by commercial
lenders.
Prime Minister Abiy Ahmed publicly criticized banks last week for maintaining the birr’s
exchange rate at artificially high levels, which were significantly out of sync with the rates in
the parallel market.
According to Abdulemenan Mohammed, a financial analyst at Portobello Group, the
parallel market rate has shown a decline since the central bank’s announcement of the
special auction.
Market participants had anticipated a substantial volume of dollars to be released,
contributing to the easing of rates. The central bank, however, has remained tight-lipped
about the exact amount of foreign currency it sold.
“While not disclosing this information could offer short-term advantages in stabilizing the
market driven by perception, it may have long-term consequences,” Abdulemenan
commented before the auction results were made public.
“Black-market traders will begin to predict the bank’s capacity to supply foreign currency,
leading to potentially volatile fluctuations in the parallel market.”
The central bank’s intervention underscores the ongoing struggle to stabilize Ethiopia’s
currency amidst economic pressures and market speculation.
Email us at: info@alleastafrica.com
