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Central Bank funds fail to save Ethiopian pearl
The Ethiopian currency (the Birr) is facing increasing pressure against the US dollar, despite Central Bank interventions totaling approximately $2.2 billion since the beginning of the year aimed at supporting the currency. Nevertheless, the Birr has lost about 3.2% of its value, reaching a record high near 162 Birr per dollar, while the dollar is currently traded at around 163.35 Birr. Demand for US dollars in the black market is also rising, with the currency being sold there at approximately 180 Birr, about a 15% premium over the official rate. The rise in oil and fertilizer prices, combined with a shortage of foreign currency, as well as ongoing tensions with Iran, have exacerbated pressure on the currency. Projections suggest further declines as the Ethiopian New Year approaches and imports increase. Currency interventions have raised concerns about the country's foreign exchange reserves, even though they have increased to roughly 20 times their levels before reforms that began in 2024, according to the International Monetary Fund, which estimated reserves at around $5.9 billion. The government anticipates continued pressure on the Birr, with the exchange rate potentially rising to between 185 and 195 Birr per dollar if demand for hard currencies remains above supply.
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