Ethiopia: $5 million remains unsold at currency auction

Twenty commercial banks participated in the operation, and all received allocations corresponding to their bids. The weighted average rate of accepted bids was set at 160.5357 birr per dollar, while the cutoff rate was established at 158.3500 birr. The highest bid reached 160.7556 birr per dollar.

This stands in stark contrast to the regular auction held on August 26. On that day, banks had requested $170.51 million for a total of $125 million, representing a demand exceeding the available offer by $45.51 million. Five banks participated, and two received currency allocations.

However, the decline in demand on September 9 does not necessarily indicate a lasting reduction in the need for foreign currency. Capital Ethiopia reports that analysts attribute this mainly to liquidity pressures in birr among banks, following several operations that mobilized significant amounts of local currency.

The auction is part of the NBE’s regular currency sales program. The central bank announced four operations of $125 million each in the first quarter of the 2026-2027 fiscal year, totaling $500 million.

The first three tranches were scheduled for August 12, August 26, and September 9. The fourth, also set at $125 million, is planned for September 23, according to the schedule provided by the central bank.

The NBE uses these auctions as part of a foreign exchange market increasingly oriented towards market mechanisms since the reform in July 2024. The auctions allow commercial banks to obtain foreign currency from the central bank based on the bids they submit.