Just a day after injecting $150 million into the banking system through one of its largest foreign exchange auctions, the National Bank of Ethiopia (NBE) has drawn a new line in the sand.
Governor Mamo Mihretu, in a statement on Wednesday, announced a sharpened crackdown on illicit currency flows, signaling the central bank’s commitment to restoring order in a volatile foreign exchange market reeling from reform and misinformation.
Related articles
“We are now backed by technology that allows us to trace transactions. Expropriation of funds is on the table,” said Mamo.
Illicit Channels in the Crosshairs
At the center of the crackdown is the parallel market, a shadowy space long used by individuals and businesses to skirt Ethiopia’s official forex channels. The NBE has named four U.S.-based money transfer services—Shegey, Adulis, TAAJ Money Transfer, and Ramada Pay (Kaah), accusing them of facilitating unauthorized currency flows into Ethiopia.
And this is just the beginning. Mamo warned that more names are coming, especially operators based in the United Arab Emirates, a growing hotspot for unregulated currency movement into East Africa.
“These actors erode public trust and distort currency rates,” Mamo emphasized, vowing legal action across jurisdictions.
FX Auctions Return With Muscle
This new enforcement push came on the heels of an aggressive FX auction that saw the NBE release $150 million through 28 commercial banks. The average clearing rate? Around 138 birr per dollar, underlining a gradual depreciation of the currency since the floatation of the birr in July 2024—a move that immediately saw the birr lose around 30% of its value against the dollar.
But the float, according to the NBE, is doing its job.
Mamo doubled down on the reform narrative, pushing back against what he called “false and baseless” social media claims about Ethiopia’s exchange rate regime.
“The IMF has not criticized our foreign exchange reforms. In fact, it has recognized their steady progress,” Mamo said.
A recent technical assessment, he added, found the birr to be stronger than previously assumed, suggesting that continued liberalization could bring even more stability.
Signs of Liquidity & Confidence
The central bank says structural challenges that previously drove businesses into the parallel market, like foreign currency request delays and excessive deposit requirements are being dismantled.
“Banks have confirmed that businesses are no longer required to deposit more birr than the requested dollar amount when opening Letters of Credit,” said Mamo.
Banks are now disbursing $500 million monthly, twice the amount seen just a year ago. Meanwhile, foreign exchange inflows into the country surged 33% last year to $32 billion, thanks to stronger coffee and gold exports, according to the NBE’s latest report.
And for businesses and travelers? The message is clear: Go to the banks. Avoid the grey zones.
“If any bank violates these new rules, report them. If individuals transact in the black market, we will confiscate the funds,” Mamo warned.
The Bigger Picture
Ethiopia’s FX regime is in flux—but not chaos. With increased reserves, stronger exports, and willingness to act on reforms, the NBE is showing both teeth and direction. The combination of market-based auctions and tech-powered enforcement marks a new phase: one that may finally close the gap between Ethiopia’s official and unofficial currency systems.
Whether this bold move will tame the birr’s volatility and win back public confidence—only time (and transparency) will tell.
Quick Facts:
- $150M released in latest FX auction (Aug 5)
- 28 banks participated
- Birr averaged 138/$ at auction
- Crackdown targets 4 U.S.-based transfer services
- Monthly bank forex disbursements: $500M
- 2024/25 FX inflows: $32B (up 33%)
