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The National Bank of Ethiopia will offer another $125 million to commercial banks on August 26, days after a record-sized $500 million special FX auction.
The National Bank of Ethiopia (NBE) is set to offer $125 million to commercial banks on Wednesday, August 26, as the central bank continues efforts to increase foreign-currency liquidity and respond to sustained demand for US dollars.
The auction will be the 27th regular foreign exchange auction conducted by the central bank and the first scheduled auction since the NBE conducted a much larger $500 million special FX sale on August 20.
The latest move comes as demand for foreign currency remains significantly higher than the amount routinely offered through the central bank’s auction system.
NBE to maintain regular $125 million auction schedule
The August 26 auction was already part of the NBE’s foreign exchange programme for the first quarter of Ethiopia’s 2026/27 fiscal year.
Under the programme, the central bank planned four regular auctions, each offering $125 million, on:
- August 12
- August 26
- September 9
- September 23
Together, the four auctions represent $500 million in planned regular FX sales.
The NBE’s decision to proceed with the August 26 auction means the $500 million special auction held last week was additional to the regular programme, rather than a replacement for the scheduled sale.
Commercial banks will submit their bids through the CSD-based FX Auction System between 10:00 a.m. and noon on August 26. The auction results are scheduled to be announced at 3:00 p.m., with settlement expected at the end of the day.
Dollar demand remains far above available supply
The latest auction comes against a backdrop of strong demand for foreign currency from commercial banks.
At the NBE’s regular auction on August 12, banks submitted bids totaling approximately $470.17 million for only $125 million available.
That means demand was nearly 3.8 times the amount offered.
The weighted average exchange rate of successful bids at the August 12 auction reached 161.7994 birr per US dollar, while the marginal rate stood at 161.0050 birr.
The high level of demand prompted the central bank to conduct a substantially larger intervention the following week.
NBE offered $500 million in special FX intervention
On August 20, the NBE conducted a $500 million special foreign exchange auction, offering four times the amount available at the previous regular auction.
Commercial banks submitted bids worth approximately $710.14 million, significantly exceeding the amount offered by the central bank.
The NBE allocated the entire $500 million, with the marginal exchange rate set at 160.2121 birr per dollar. The weighted average rate was 160.2144 birr per dollar.
The special auction therefore provided a substantial increase in foreign-currency supply compared with the central bank’s normal $125 million auction.
Despite the size of the intervention, the latest regular auction shows that the NBE continues to face a market where demand for dollars remains elevated.
Birr remains around the 160-per-dollar level
The latest auctions also provide an indication of where the birr is trading in the NBE’s auction market.
The exchange rate moved above 161 birr per dollar at the August 12 auction before the larger August 20 intervention brought the marginal rate down to approximately 160.21 birr per dollar.
The August 26 auction will therefore be closely watched by banks and businesses for signs of whether the increased supply of foreign currency is helping to ease pressure on the birr.
The clearing rate and weighted average rate from Wednesday’s auction could provide an indication of how foreign-currency demand is evolving following the central bank’s $500 million intervention.
Why the FX auctions matter
The NBE introduced its regular foreign exchange auction programme in August 2024 as part of Ethiopia’s broader transition toward a more market-oriented foreign exchange system.
The auctions are designed to provide foreign currency to the private sector while supporting foreign exchange market stability and the central bank’s monetary policy objectives.
For businesses, the availability and cost of foreign currency can directly affect the ability to finance imports, settle international obligations and access essential inputs.
For the wider economy, movements in the birr-dollar exchange rate also influence import costs, inflationary pressures and the local-currency value of foreign obligations.
What to watch on August 26
The key figures from Wednesday’s auction will be the total value of bids submitted by commercial banks, the amount allocated, the marginal exchange rate and the weighted average exchange rate.
If demand again substantially exceeds the $125 million available, it would reinforce the picture of persistent foreign-currency demand despite the NBE’s recent $500 million intervention.
Conversely, a significant decline in the bid-to-supply ratio could indicate that the additional foreign-currency liquidity injected through the special auction is beginning to ease pressure in the market.
The August 26 auction will therefore provide an important early indication of how the foreign exchange market has responded to one of the NBE’s largest recent interventions.
The central bank is expected to announce the results at 3:00 p.m. on Wednesday.
