Marching Orders for the Birr Leave Floating in Recess

Dec 6 , 2025.

The Birr’s cash market moved last week with the discipline of a parade instead of the clamour of traders shouting for a better price. For six straight days, rates crept upward in near-perfect formation, the spread between buying and selling locked at the regulator’s two-percent ceiling, so narrow that no daylight slipped between one quote and the next.

This was a managed crawl, not a discovery. Yet, the shift was real.

Commercial banks tightened their buying offers from roughly 151.3 and 151.9 Br to 151.5 and 152 Br, and their selling quotes inched from 154.3 and 154.9 Br to 154.6 and 155 Br. The daily gain, six to 10 basis points, was quick enough to register motion but too even to deserve the label “market driven.”

Two institutions patrolled the high ground. Oromia Bank’s cash window touched 157.62 Br to the dollar on Saturday, and Siinqee Bank ended the week at 157.39 Br. On the opposite flank, Tsehay Bank bought greenbacks near 150.63 Br and sold them around 153.64 Br. The centre of gravity sat at 151.9 Br for buying and 154.9 Br for selling, an alignment visible in the tight cluster of posted rates and confirmed by Saturday’s industry averages.

Scarcity still ruled the foreign-exchange market, but pressure was contained, not released. Each trading day, the Brewed Buck drifted a touch weaker, the path smoothed by policy, not competition. On December 1, most banks bought between 150.59 and 151.99 Br and sold at 153.60 and 155.03 Br. By December 6, the pack had inched to 151.53 and 152.01 Br on the bid side and 154.56 and 155.05 Br on the offer side. Oromia and Siinqee banks sat well above 157 Br, yet the mainstream barely strayed from the corridor the Central Bank had drawn.

A hierarchy emerged, though. Oromia and Siinqee banks, feeling the heaviest import pressure, stayed glued to the ceiling every session. The policy core, such as the state-owned Commercial Bank of Ethiopia (CBE), Dashen, Awash, Abyssinia, Wegagen and Zemen banks, kept to a corridor of 151.3 and 151.9 Br buying and 154.3 and 154.9 Br selling, effectively defining the officially sanctioned rate. Conservative banks such as Tsehay lingered at the bottom, preferring to slow the inflow of hard-currency requests and husband their small allocations.

Signals of stress were notably absent. No one blew out a spread, no bank lurched for dollars, no whispers of panic crossed dealing rooms. Supply was scarce but predictable; managers quietly rationed their quotas, doling out hard currency to pre-approved lists rather than letting price sort out demand. The result looked less like an exchange and more like a queue at a government counter.

Nothing about this setup resembles liberalisation. Governor Eyob Tekalegn (PhD) calls the tune, operating what market watchers described as a “corridor-controlled crawl.” The Central Bank sets the day’s permissible drift and the two-percent band, and the commercial banks fall in line. That may satisfy the International Monetary Fund (IMF) benchmarks for eventual rate unification, yet stops well short of bringing onshore prices anywhere near the parallel market, where the dollar still trades at a hefty premium of over 180 Br.

One subplot drew attention. The five largest private banks (Awash, Abyssinia, Dashen, Wegagen and Zemen) priced below the industrial average of 151.94 Br for most of the week.

The Central Bank determined who leads. On Saturday, it published a 154.95 Br buying rate, higher than Oromia Bank’s 154.53 Br and fully 4.33 Br above Tsehay Bank’s bid. It also resumed bi-weekly auctions, offering 100 million dollars in December, split into two rounds. Officials say the volume will rise to 140 million dollars a month in the first quarter of 2026, with each sale sized between 50 million and 70 million dollars.

Those auctions trace the slope of depreciation. In July, 50 million dollars cleared to 11 banks at 136.6 Br. August saw 150 million dollars steered to 28 financial institutions at 138.2 Br. Mid-October placed another 150 million dollars with 31 banks at 148.1 Br. Last Saturday, the Central Bank’s own cash window quote sat at 155 Br, proof that the glide path is fully embedded in retail counters.

Three behavioural bands crystallised. A policy-tracking core moved almost in lockstep, logging six- to 10-basis-point daily steps. A premium tier (Oromia and Siinqee banks) paid up to secure stock for customers facing urgent trade bills. A cautious tier, illustrated by Tsehay Bank and a handful of smaller lenders, posted low rates as a polite “closed” sign.

The institutional twist was the real story. By offering the market’s highest bid and promising 520 million dollars of fresh supply over the coming months, the Central Bank has displaced commercial banks as the marginal price setter. Instead of the messy chase toward parallel-market levels seen in other managed floats, the Birr is sliding along a smooth, policy-led line.

Even inside the upper tier, behaviour diverged. Oromia Bank, already camped at the ceiling, barely accelerated. Siinqee Bank, catching up late in the week, booked a 93.1-basis-point average daily rise. The policy core advanced about 0.30 to 0.40 Br over six days, roughly eight basis points each day, while conservative banks hardly budged. Industry-wide, the managed depreciation averages eight basis points a day, or 2.4pc a month, translating to an annual pace near 30pc.

Only Siinqee Bank broke formation, either reflecting acute corporate demand or a deliberate test of the band. Oromia Bank, often capped already, had no need to move.

Market watchers cautioned that the crawl is too slow to close the premium with the curb market, yet too quick to be neutral on inflation. Perhaps a gradual slide is the only way to avoid a shock under thin reserves. However, the gap that monetary policy seeks to narrow remained wide.

PUBLISHED ON Dec 06,2025 [ VOL 26 , NO 1336]