The National Bank of Ethiopia (NBE) has announced a special foreign exchange auction set for August 7, 2024. This move is a part of the central bank’s broader strategy to manage the country’s foreign exchange market.
The auction, which will be conducted between 10 AM and 12 Noon, invites bids from interested banks through the Foreign Exchange Monitoring and Reserve Management Directorate (FEMRMD) at the NBE. Participating banks are required to submit detailed bids, including the amount of US dollars they wish to purchase and the price they are willing to offer, denominated in Ethiopian Birr (ETB) per USD.
The NBE has set strict conditions for this auction. Notably, no bank will be allowed to purchase more than 20% of the total US dollars available in the auction. Successful banks will have to settle their transactions on the same day as the auction, ensuring prompt liquidity in the market. The weighted average bid price of all successful bids will be announced by 3 PM on the auction day.
This auction is a critical measure by the NBE to stabilize the Ethiopian Birr, which has faced significant devaluation pressures in recent years. The central bank’s intervention aims to address the persistent foreign currency shortages that have been affecting businesses and the broader economy.
Depending on the outcomes of this auction, the NBE may conduct additional foreign exchange auctions in the coming weeks. This could signal a more sustained effort to stabilize the currency and manage the country’s foreign exchange reserves.
