Ethiopian gov’t policy to narrow down rate of exchange between legal forex and parallel seemingly failing again
Borkena
Toronto – This week, the National Bank of Ethiopia announced the tenth forex rationing. $150 million was made available. Private and Public banks took part in it. It was distributed to 31 Banks’
And the news emerging in the aftermath of it seems to suggest that the policy measure intended to narrow down the gap in the rate of exchange between the parallel market and the legitimate currency seems to be ending in vain.
The National Bank of Ethiopia adjusted the exchange rate for $1 to 148 Ethiopian birr – apparently accepting more dictation from the creditors – the World Bank and IMF. This rate is up by 7 Ethiopian birr from the rate in the previous auction.
The latest adjustment from the National Bank had triggered a spike in the rate of exchange in the parallel market. US$1 was selling as high as 170 Ethiopian Birr.
Government authorized Forex outlets have reportedly been selling at a rate of $167 and buying at a rate of $165. Borkena reporter based in Addis Ababa reported authorized forex businesses like Roha were buying $US dollars at a rate of 161 Ethiopian Birr before the National Bank made adjustments which was reflected in the latest auction.
There are also other authorized forex offices that are buying US dollars at a rate of 165 Ethiopian Birr. Furthermore, our reporter found out that the forex offices seem to have a better cash supply compared to banks.
Notably, Mamo Mihretu resigned as government of the National Bank last month to “pursue other interest” barely a little over a year after leading a major macro-economic policy change that led to what many describe as “free fall” of Ethiopian Birr. In July 2024, One US dollar was fetching only $57 Ethiopian Birr. Currently, it is the former state minister for economic planning and development, Eyob Tekaligne, that is in charge of the National Bank as governor.
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