The National Bank of Ethiopia (NBE) allotted USD 500 million at a Special Foreign Exchange Auction held on Thursday, clearing the market at a marginal rate of 160.2121 Birr per US dollar, 0.79 birr below the cut-off rate recorded at the regular auction eight days earlier.
The intervention was four times the size of Foreign Exchange Auction No. 25, held on 12 August, at which the central bank offered USD 125 million and the auction cleared at 161.0050 Birr/USD. Thursday’s sale, in a single sitting, matched the entire USD 500 million the NBE had allocated for four bi-weekly auctions across the first quarter of FY 2026/27.
Total bids reached USD 710.14 million, up 51 percent from the USD 470.17 million submitted on 12 August. But because the amount on offer quadrupled, the bid-to-cover ratio collapsed from 3.76 times to 1.42 times, the loosest auction cover since demand began accelerating in July.
The rate moved the other way
The most consequential number is the weighted average rate of successful bids: 160.2144 Birr/USD, against 161.7994 Birr/USD on 12 August. That is a decline of 1.585 birr, or 0.98 percent, and it reverses a run of increases that had taken the auction-cleared rate from 157.00 Birr/USD in late June to a record high a week ago.
Two features of the bidding stand out.
First, the spread between the weighted average and the marginal rate almost vanished. On 12 August the average successful bid sat 0.7944 birr above the cut-off, meaning banks that won were paying well above the clearing price to secure scarce dollars. On Thursday that spread was 0.0023 birr, effectively zero. Banks bid at, not above, the cut-off.
Second, the entire bid distribution compressed. The range between the highest and lowest submitted bid narrowed from 4.0074 birr to 0.7497 birr. More tellingly, the highest bid on Thursday, 160.2500 Birr/USD, was lower than the cut-off rate of the previous auction. No participating bank was willing to pay what winning banks had paid eight days earlier.
Allocation broadened sharply
Participation fell from 28 banks to 22, but the number of successful bidders rose from 9 to 21. The win rate jumped from 32 percent to 95 percent, with the single unsuccessful bank pricing itself out at 159.5003 Birr/USD, below the cut-off.
Unmet demand, total bids less the amount allotted, fell from USD 345.17 million to USD 210.14 million, even as gross demand rose.
Auction No. 25 vs. Special Auction
| Metric | Auction No. 25 (12 Aug) | Special Auction (20 Aug) | Change |
|---|---|---|---|
| Amount allotted | USD 125.00m | USD 500.00m | +USD 375.00m (4.0x) |
| Total bids | USD 470.17m | USD 710.14m | +51.0% |
| Bid-to-cover | 3.76x | 1.42x | –2.34x |
| Marginal (cut-off) rate | 161.0050 | 160.2121 | –0.7929 birr (–0.49%) |
| Weighted average rate | 161.7994 | 160.2144 | –1.5850 birr (–0.98%) |
| Highest bid | 163.9899 | 160.2500 | –3.7399 birr (–2.28%) |
| Lowest bid | 159.9825 | 159.5003 | –0.4822 birr |
| Avg-to-cut-off spread | 0.7944 birr | 0.0023 birr | –0.7921 birr |
| Bid range (high–low) | 4.0074 birr | 0.7497 birr | –3.2577 birr |
| Participating banks | 28 | 22 | –6 |
| Successful banks | 9 | 21 | +12 |
| Unmet demand | USD 345.17m | USD 210.14m | –USD 135.03m |
Source: National Bank of Ethiopia; StockMarket.et calculations
Context: an expensive defence
The special auction was announced outside the published bi-weekly calendar, which had set auctions of USD 125 million each for 12 August, 26 August, 9 September and 23 September. The NBE described the operation as being conducted for monetary policy purposes.
It follows a period of visible strain. The birr had weakened to a record low against the dollar in the days before the sale, and Bloomberg reported that the central bank had spent roughly USD 2.2 billion this year supporting the currency. The 12 August auction had signalled the pressure clearly: bids nearly tripled from the June sale while the amount offered rose only 25 percent.
Thursday’s result shows that a large enough injection can move the clearing rate. Whether it holds is a separate question. The compression of the bid range and the near-zero premium over the cut-off suggest banks read the USD 500 million as a supply ceiling for the day rather than a change in the underlying balance, and USD 210 million of demand still went unfilled at a rate the central bank was willing to accept.
Two further tests follow quickly. The next scheduled auction, on 26 August, returns to USD 125 million. If cover ratios revert toward the 3.8x level seen on 12 August at that smaller size, the appreciation recorded on Thursday will look like a function of the amount sold rather than of demand easing.
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