ADDIS ABABA, Jan 27 – The National Bank of Ethiopia (NBE) sold $500 million in a special foreign exchange auction on Monday, attracting total bids of $592.3 million. The weighted average rate of successful bids was 154.8164 birr per US dollar.
The highest accepted bid was 154.9980 birr, while the lowest cleared at 153.5000 birr. 31 banks participated, with 25 institutions receiving allocations.
The country’s central bank introduced the foreign exchange auction system in 2025 to improve transparency and liquidity in Ethiopia’s foreign exchange market. The mechanism allows commercial banks to submit bids for US dollars, with results announced publicly and competitively. Previously, the central bank relied on administrative allocations, which often created gaps between official and parallel market rates.
Since mid-2024, Africa’s second-most populous country has implemented broader macroeconomic reforms, including liberalising the exchange rate system, boosting foreign currency inflows through exports and remittances, and building central bank reserves.
The auctions provide a transparent reference price for the Birr and serve as the main channel for commercial banks to meet foreign currency demand for trade and business. In the first half of the current fiscal year, which began in July, the country generated 5.10 billion US dollars in export revenue and received 7.17 billion US dollars in remittances for the 2024/25 fiscal year.
Market analysts said the auction highlighted the central bank’s role in supplying foreign exchange to the market but warned that it is important to monitor how commercial banks deploy the currency to ensure it aligns with broader economic needs.
“This is a masterclass in market-clearing strategy. By unleashing this volume of US dollars, the NBE is decisively crushing the parallel market’s influence and signalling that the FX float has moved from a test phase to a position of real strength.
Such a bold intervention, likely backed by record gold reserves and recent IMF disbursements, demonstrates the central bank is finally outpacing demand. This is a major milestone for predictability and stability in Ethiopia’s trade finance ecosystem,” Tadesse Kefale, a banking and finance expert, wrote on social media.
This comes barely a week after the International Monetary Fund (IMF), the engine driving the nation’s reforms, released 261 million US dollars to the country. The IMF’s Extended Credit Facility, approved in July 2024 for about 3.4 billion US dollars, is aimed at driving macroeconomic reforms and shoring up external stability. With this latest tranche, total support under the arrangement has topped 2.18 billion US dollars.
