The National Bank of Ethiopia (NBE) has concluded its largest foreign exchange auction since the July 2024 forex reform, selling USD 500 million to commercial banks in a special auction held on Tuesday.
According to the central bank, total bids reached USD 592.3 million, exceeding the allotted amount and underscoring continued strong demand for foreign currency across the banking sector.
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The auction cleared at a marginal (cut-off) rate of 154.24 birr per US dollar, while the weighted average rate of successful bids stood at 154.8164 birr per dollar. Bid rates ranged between a low of 153.50 birr and a high of 154.998 birr.
A total of 31 banks participated, of which 25 banks were successful in securing foreign currency.
The results indicate relative exchange rate stability compared to the previous auction, where the US dollar cleared at 154.78 birr. Despite the significantly larger auction size, the birr remained broadly stable, suggesting that the market absorbed the increased supply without sharp depreciation pressures.
The fact that total bids exceeded supply reflects persistent structural demand for foreign exchange, driven by import needs, debt servicing, and private-sector requirements. However, the narrow bid range and contained clearing rate point to improving price discovery under the auction-based system.
The forex auction mechanism remains a key pillar of Ethiopia’s post-reform monetary and exchange rate framework, replacing administrative allocation with market-based price determination. Since the reform, NBE has used periodic auctions to manage liquidity, smooth excessive volatility, and narrow the gap between official and parallel market rates.
Tuesday’s auction marks the largest single FX injection since the reform, reinforcing the central bank’s commitment to supporting market functioning while maintaining the broader reform trajectory.
