The foreign exchange market remained notably stable last week, with only subtle fluctuations in the value of the Brewed Buck against the Green Buck. Banks maintained a uniform spread over the six days starting November 11, 2024, adhering to a two percent margin between buying and selling rates. The National Bank of Ethiopia's (NBE) firm regulation imposes uniformity, hoping to prevent excessive volatility during mounting economic pressures.

Governor Mamo Mihiretu's cautious position signalled his intent to manage expectations and discourage speculative activities that could fuel inflation. Gone are the days when banks engaged in cutthroat competition over widening spreads; the Central Bank's approach to discipline the industry seeks to prevent abrupt swings in the currency market.

However, some banks deviated from this pattern, revealing underlying dynamics in response to liquidity pressures. Notably, Dashen Bank posted the highest buying rate of 122.85 Br on November 15 and 16, nearly three Birr above the market average. Dashen Bank's executives were actively courting forex holders, possibly due to internal liquidity needs or in anticipation of increased foreign currency demand. By offering a more attractive rate, Dashen Bank may be targeting to beef up its foreign currency reserves.

In contrast, the state-owned Commercial Bank of Ethiopia (CBE) maintained the lowest buying rate at 119.2044 Br, positioning itself as a conservative force in the market. CBE's traditionally cautious approach indicates a strategy that prioritises stability over aggressive expansion.

The average buying rate among banks hovered around 120.64 Br to the dollar, while the selling rate averaged 123.25 Br. Selling rates also varied, with the Central Bank's weighted average inching upward from 122.2 Br on November 11 to 122.7 Br five days later. These subtle adjustments unveiled the Central Bank's acknowledgement of the Birr's depreciating pressure without triggering an alarm or fueling inflationary expectations.

Private banks such as the Cooperative Bank of Oromia (Coop Bank) and Wegagen Bank posted elevated selling rates, reaching 124 Br and 125.3 Br, respectively, on November 15 and 16. These higher rates may reflect attempts to counterbalance increased buying prices, indicating liquidity constraints or a strategy to capitalise on heightened demand for foreign currency. Other banks, like Zemen Bank, held steady with lower selling rates, reinforcing their roles as conservative players capable of sustaining narrower spreads without losing market share.

In the high-stakes world of foreign exchange, banks reveal their strategic playbooks through the buying and selling rates they post each day. An analysis of recent data uncovered a clear pattern. They clustered into distinct categories based on shared behaviours in setting these rates, signalling divergent approaches in a fiercely competitive market. At the centre of this segmentation lies the average buying rate of 120.80 Br and an average selling rate of 123.17 Br. Yet, not all banks fit into these benchmarks. Some consistently undercut the averages, while others push their rates higher, uncovering differing priorities and strategies.

Banks like Goh Betoch (GBE), Tsehay (TES), Gadaa (GAD) banks, and CBE consistently posted buying rates below the average. Goh's buying rate stood at 119.0210 Br, and Gadaa's at 119 Br, both quite lower than the mean. On the selling side, these banks again offered rates beneath the average: Goh at 121.4 Br and Gadaa at 121.39 Br. These banks may appeal to businesses with long-term foreign exchange needs by offering lower buying and selling rates, such as importers seeking cost-effective currency purchasing.