On September 9 the National Bank of Ethiopia held its Foreign Exchange Auction No. 28 and offered $125 million to commercial banks. Banks put in bids for about $120 million, which left $5 million unsold, according to results summarized by Banks Ethiopia and Capital Ethiopia. All twenty banks that took part received dollars. The weighted average rate was 160.5357 birr per U.S. dollar. The lowest accepted bid was 158.3500 birr, and the highest successful bids reached 160.7556 birr.
In earlier rounds, banks had asked for far more dollars than the central bank was selling. Banks Ethiopia reported that on August 12, bids reached roughly $470 million, nearly 3.8 times what was on offer. Capital Ethiopia reported that on August 26, five participating banks bid about $170.51 million for the same $125 million offer. By September 9, bids came to about 0.96 times the dollars on offer. The auction rate stayed close to the 160-birr level of recent rounds and moved only about 0.2 percent from the August 26 weighted average.
Capital Ethiopia’s September 13 report, by Eyasu Zekarias, looked at the reasons for the drop. Financial sector analysts and economists cited by Capital said the lower bids reflected a temporary shortage of birr at commercial banks. Capital described this as a short-term liquidity squeeze in the banking system. Capital reported that many banks were close to the central bank’s liquidity ratio rules, which left them less birr to spend on auction dollars.
Banking and economics analyst Yisehak Teka told the paper that demand for foreign currency is still rooted in imports of consumer goods, factory inputs, and capital equipment. He said export earnings still trail the import bill and remittance inflows. Capital reported that gross reserves rose to about $5.5 billion, enough for roughly 3.5 months of imports. It added that the International Monetary Fund (IMF) still describes Ethiopia’s external position as vulnerable and dependent on outside financing.
Capital also linked the quieter rounds to a special auction of $500 million on August 19, 2025, which it said cleared pent-up demand. Yisehak told the paper that a small rise in the birr’s value at the margin can calm speculation. “When depreciation expectations subside, market participants hold birr more willingly, which dampens artificial dollar demand and supports convergence between the official and parallel market rates,” he said.
The analysts cited by Capital cautioned against reading one auction as a sign of “permanently reduced foreign exchange demand.” Capital reported that a steady supply of dollars through auctions helps keep the parallel market premium low. Yisehak said the reforms also need support from monetary policy, market monitoring, and anti-money-laundering controls.
The central bank’s reform program since July 2024, backed by the IMF and the World Bank, has replaced some administrative dollar allocations with regular auctions. Banks Ethiopia listed September 23 as the date of the next regular $125 million auction.
In Auction No. 28, the central bank offered $125 million, banks bid for $120 million, and the weighted average rate was 160.5357 birr per dollar. Analysts cited by Capital Ethiopia said a temporary shortage of birr at the banks explains the gap.
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