The National Bank of Ethiopia (NBE) conducted its 32nd foreign exchange auction on November 10, 2026, with commercial banks submitting bids worth $156.73 million. This amount exceeded the allocated $140 million by $16.73 million. The auction saw participation from 31 commercial banks, with 26 successful in securing foreign currency.
The marginal exchange rate, or cut-off rate, was set at 159.1876 Ethiopian Birr per US dollar, while the weighted average rate of successful bids stood at 159.7091 Birr per dollar. This indicates a continued weakening of the Birr against the US dollar. The excess demand for foreign currency is a persistent trend, as seen in previous auctions.
In the previous auction, No. 30, held on October 13, 2026, the central bank allocated $140 million, with total bids reaching $152.09 million. The marginal rate in that auction was 158.1724 Birr per dollar. The ongoing excess demand for foreign currency suggests that the Birr's value is under pressure.
The NBE's foreign exchange auctions aim to meet the demand for foreign currency from commercial banks, which in turn cater to their clients' needs. The auctions are part of the central bank's efforts to manage the foreign exchange market and maintain stability. However, the persistent excess demand indicates that the market is yet to find a balance.
The weakening of the Birr has implications for Ethiopia's economy, particularly for imports and foreign debt servicing. A weaker Birr makes imports more expensive, which can lead to higher prices for goods and services. The central bank's actions, including the auctions, are being closely watched by businesses, policymakers, and the general public.
The latest auction results also highlight the challenges faced by the NBE in managing the foreign exchange market. The bank has been using various tools, including auctions and reserve requirements, to regulate the market. However, the ongoing excess demand suggests that more needs to be done to address the underlying issues.
The outcome of the auction has been met with interest from various stakeholders, including businesses, investors, and analysts. They are keenly watching the developments in the foreign exchange market, as they have a significant impact on the overall economy. The NBE is expected to continue its efforts to stabilize the market and manage the demand for foreign currency.
Key points
- The National Bank of Ethiopia's latest foreign exchange auction saw commercial banks bid $156.73 million, exceeding the allocated $140 million.
- The marginal exchange rate was set at 159.1876 Ethiopian Birr per US dollar, indicating a continued weakening of the Birr.
- The persistent excess demand for foreign currency suggests that the Birr's value is under pressure.
