The National Bank of Ethiopia (NBE) has officially resumed its foreign exchange (FX) auctions after a brief pause, injecting a significant $150 million into the market on August 5, 2025. The move comes as the central bank signals improving foreign exchange inflows and aims to further support Ethiopia’s formal FX market and macroeconomic stability.
In its announcement, the NBE stated that the FX auction — the ninth in the series — was launched in response to higher-than-expected inflows at the beginning of the 2025/26 Ethiopian fiscal year. The central bank emphasized that this step is aligned with its commitment to price stability and external sector balance.
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The auction attracted bids from 28 commercial banks, all of which received allocations. The weighted average rate for successful bids settled at Birr 138.2555 per U.S. Dollar, reflecting a further movement toward a market-clearing rate after Ethiopia’s July 2024 decision to float the birr.
The resumption of the auction follows a notable increase in foreign exchange receipts, which sources indicate are driven by a rebound in remittances, donor support, and stronger export earnings. Analysts say this could relieve some pressure off the parallel market, where the dollar had been trading at rates exceeding 170 birr before recent interventions.
In a report published by Capital Ethiopia, central bank officials noted that the stepped-up allocations by commercial banks were already addressing pent-up demand. The auction mechanism, they emphasized, will remain a key tool for transparent and demand-driven FX allocation.
The central bank reassured the public and business community that Ethiopia’s FX market is stabilizing, and further auctions will be conducted as needed based on evolving market conditions.
This development comes amid broader reforms under Ethiopia’s economic program supported by the IMF and other partners, which include transitioning to a market-determined exchange rate regime and modernizing the monetary policy framework.
What’s Next?
The NBE did not specify the timing of the next auction but affirmed that future auctions will be announced in advance. Market observers will be watching closely to see whether the current pace of inflows continues and whether the exchange rate stabilizes at levels that bridge the gap between official and parallel markets.
Takeaways:
- NBE resumed FX auctions with a $150 million injection on August 5, 2025.
- 28 banks participated; the weighted average exchange rate was 138.2555 birr/USD.
- The decision follows improving FX inflows and supports a more market-oriented FX regime.
- Further auctions will be held based on market developments.
This move marks another step in Ethiopia’s ongoing efforts to liberalize its foreign exchange market while maintaining stability during a crucial reform period.
