On September 9 the National Bank of Ethiopia held Foreign Exchange Auction No. 28 and offered $125 million to commercial banks. Banks submitted about $120 million in bids, leaving $5 million unallocated, according to results summarized by Banks Ethiopia and Capital Ethiopia. All twenty participating banks received allocations. The weighted average clearing rate was 160.5357 birr per U.S. dollar, with a marginal cut-off at 158.3500 birr and successful bids ranging up to 160.7556 birr. For a market that had spent prior rounds chasing more dollars than the central bank would sell, the undersubscription looked like a turning point. It was not proof that Ethiopia’s foreign-exchange shortage had ended.
Banks Ethiopia noted how sharp the swing was. On August 26, banks bid about $170.51 million for the same $125 million offer. On August 12, bids reached roughly $470 million, nearly 3.8 times supply. By September 9, bid volume sat at about 0.96 times the dollars on offer, and every one of the twenty banks got what it asked for. The auction rate stayed close to the 160-birr area seen in recent rounds, moving only about 0.2 percent from the August 26 weighted average. A quieter bid book beside a still-managed rate is a different story from a sudden flood of hard currency into the wider economy.
Capital Ethiopia’s September 13 report pushed that distinction further. Banking and macro analyst Yisehak Teka and other specialists told the paper the undersubscription reflected a birr liquidity crunch inside commercial banks, not a structural collapse in demand for dollars. Banks that had pushed against regulatory liquidity ratios had less room to put more birr on the table to buy auction dollars. Ethiopia’s import bill for consumer goods, industrial inputs, and capital equipment remains large. Export earnings still trail what the country spends abroad. Gross reserves improved to about $5.5 billion by the first quarter of fiscal year 2026, covering roughly 3.5 months of imports on the figures Capital cited, yet IMF assessments still describe external sustainability as vulnerable to shocks and dependent on external financing.
September 23 was the next scheduled $125 million regular auction date after No. 28, according to Banks Ethiopia’s write-up of the September 9 result. As of this article’s preparation, public detailed results for that session were not yet widely posted in the same clear format as Auction No. 28. That makes today a test day that banks, importers, and parallel-market dealers watch closely. If bids stay soft while the weighted average hugs the managed 160 zone, the birr-liquidity explanation gains weight. If demand surges again toward August levels, the September 9 undersubscription looks more like a one-off pause after earlier special supply. Either way, a single auction print is not a verdict on whether households and firms can buy dollars at a rate that matches what the market actually clears outside bank counters.
People use hawala and other parallel channels because the birr they meet in daily life does not reflect a free market value for foreign currency. When the official and auction rates are held in a narrow band that suits administrative convenience, the gap becomes a rent. Managed rates that do not clear real demand make it easier for connected actors to capture cheap dollars and harder for ordinary importers to plan. Crackdowns on market-rate exchangers do not invent the dollars the economy needs. They push more transactions into informal networks and raise the risk premium people pay to move money for family support, school fees, medicine, and small trade.
The editorial point follows from those mechanics. Shrinking the black market means letting the birr float toward a rate that clears supply and demand, not criminalizing the people who already price currency at market value. Formal FX “wins” that celebrate undersubscribed auctions or tighter policing of parallel desks can hide the same shortage under a quieter bank bid book. Capital’s sources were careful not to read No. 28 as proof of surplus dollars. Mereja’s reading is the same: banks short of birr liquidity can undersubscribe an auction even while importers still wait weeks for hard currency and families still route remittances through informal channels.
NBE’s wider reform story since July 2024 has replaced some administrative allocations with regular auctions under an IMF- and World Bank-backed program. Special large offerings, including a reported $500 million injection cited by Capital from August 2025, can clear backlogs for big banks and then leave quieter follow-on rounds. That sequence explains how participation can widen to twenty banks while total bids fall below supply. It does not show that hawala demand has vanished, or that exporters suddenly earn enough to cover the import bill, or that the parallel premium has been solved by announcement.
What Auction No. 28 does show is measurable. The central bank offered $125 million. Banks bid $120 million. The weighted average was 160.5357 birr per dollar. Analysts quoted by Capital say birr liquidity, not a structural FX surplus, drove the gap. September 23’s scheduled auction is the next public stress test of that claim. Until the birr is allowed to find a market-clearing value, managed auction calm and parallel-market life will keep running on different clocks, and people will keep paying the difference.
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