Addis Ababa, May 7, 2025 — The National Bank of Ethiopia (NBE) sold U.S. dollars at an average exchange rate of 132.9643 birr during its most recent foreign currency auction held today, continuing its new auction-based approach to managing the country’s forex supply.
According to the central bank, a total of 16 commercial banks participated successfully in the auction, acquiring the full amount of foreign currency they had requested. The auction offered a total of $50 million in foreign exchange to the participating banks.
The weighted average rate of 132.9643 birr per dollar represents a modest increase from the previous auction held 15 days ago, where the average rate stood at 131.70 birr per dollar. This steady upward adjustment reflects the central bank’s ongoing efforts to narrow the gap between the official and parallel market exchange rates and move toward a more market-responsive exchange rate regime.
This biweekly auction system, introduced as part of the NBE’s broader monetary policy reforms, aims to increase transparency, allocate foreign exchange more efficiently, and gradually transition toward a more flexible exchange rate mechanism. The auctions are open to all licensed banks, which submit bids based on their foreign currency needs and market demand.
In its statement, the National Bank reiterated its commitment to conducting these auctions every 15 days, with the next round scheduled in two weeks. Further details regarding participation, bidding procedures, and allocation will be provided in advance of the upcoming auction.
Analysts suggest that the auction-based system may help alleviate some of Ethiopia’s chronic foreign currency shortages by encouraging more realistic pricing and reducing speculative pressure on the black market. However, the gradual devaluation trend could also pose inflationary risks if not matched by fiscal discipline and external support.
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