The National Bank of Ethiopia (NBE) has announced plans to hold regular foreign exchange auctions every two weeks, beginning with a USD 50 million auction scheduled for today. This initiative, which will continue for the next several months, aims to stabilize the foreign exchange market and ensure a steady supply of foreign currency to the private sector.
The central bank stated that Ethiopia’s external balance of payments has improved since the launch of a comprehensive macroeconomic reform in July 2024. As a result, the country’s foreign exchange reserves have reached historic highs, with a notable surge in gold supply contributing to the rise.
“In recent months, the amount of gold supplied to the National Bank has exceeded expectations, leading to a stronger foreign exchange reserve position,” NBE stated. Given the improved availability of foreign currency, the bank has decided to introduce regular auctions to allocate a portion of its reserves to the private sector and support monetary policy objectives. Governor Mamo Mihretu highlighted that Ethiopia’s foreign exchange reserves have increased by 200% over the past nine months, following the revision of the country’s foreign exchange rate policy.
NBE also held discussions with bank executives regarding the implementation of foreign exchange management directive. Governor Mamo noted that some inefficiencies in the process had been identified and emphasized the need for corrective measures. He stated that agreements were reached to ensure that bank service fees remain affordable, that foreign currency is made available to the private sector, and that the directive is enforced promptly.
To further stabilize the market, the central bank has vowed to crack down on illegal foreign currency transactions and money laundering. “Strict control and enforcement measures will be taken in cooperation with security institutions to prevent unauthorized foreign exchange activities,” the governor warned. He added that links between illegal currency traders and Ethiopian banks would be severed to curb illicit financial flows.
NBE urged banks to submit bids for the upcoming auctions within the designated timeframe and called on the public to avoid dealings with unlicensed foreign exchange operators.
Source: Ethiopian News Agency
