Central Bank of Ethiopia Rolls Out Bi-Weekly Forex Auctions Amid Rising Reserves

Addis Ababa, Ethiopia – Saturday, May 3, 2025 – The National Bank of Ethiopia (NBE), the nation’s central bank, has announced the implementation of bi-weekly foreign exchange (forex) auctions, signaling a strategic move to manage the country’s growing foreign currency reserves and enhance market stability.

This decision comes on the heels of a notable increase in Ethiopia’s forex reserves, driven by robust export earnings, particularly from key sectors like gold and coffee, a significant surge in remittances from the Ethiopian diaspora, improved capital inflows, and record-high gold supplies channeled through the NBE, the sole authorized exporter.

In a statement released today, the NBE outlined the objectives of these regular auctions. By allocating a portion of its accumulated foreign currency to authorized commercial banks through a transparent bidding process, the central bank aims to ensure a more consistent and predictable supply of hard currency to meet the demands of the private sector. Priority sectors expected to benefit include fuel imports, pharmaceuticals, and manufacturing.

“The introduction of bi-weekly forex auctions is a proactive measure to foster stability within the foreign exchange market and effectively channel our increased reserves to support critical economic activities,” stated a high-ranking official at the National Bank of Ethiopia. “This initiative is designed to enhance transparency, improve market liquidity, and provide businesses with greater certainty regarding access to foreign currency.”

The first bi-weekly auction, conducted in early May 2025, reportedly resulted in a weighted average exchange rate of approximately 131.71 Ethiopian Birr per US Dollar, with several commercial banks successfully securing allocations. Market analysts view this development as a positive step towards addressing the persistent demand for foreign currency within the Ethiopian economy.

Furthermore, the NBE reiterated its commitment to combating illegal foreign currency transactions and money laundering activities, emphasizing that these efforts are integral to maintaining a stable and regulated financial environment.

The implementation of these bi-weekly auctions is anticipated to have several positive impacts, including:

• Enhanced Market Stability: Regular forex supply is expected to mitigate volatility in the exchange rate.
• Support for Monetary Policy: This measure aligns with the central bank’s broader monetary policy objectives aimed at price stability and sustainable economic growth.
• Meeting Private Sector Needs: Increased access to foreign currency will support businesses in importing essential goods and raw materials.
• Improved Transparency: The auction mechanism provides a clear and transparent process for forex allocation.

Market participants and businesses across Ethiopia will be closely monitoring the effectiveness of these bi-weekly auctions in the coming weeks and months. The initiative is seen as a key indicator of the central bank’s commitment to prudent economic management and fostering a conducive environment for trade and investment.

About the National Bank of Ethiopia (NBE):

The National Bank of Ethiopia is the central bank of Ethiopia. Its main objectives are to maintain price and exchange rate stability and to foster a sound financial system.