The widening gap in foreign exchange rates among commercial banks fuelled tension in the forex market last week, as banks maneuvered to attract hard currency on the most favorable terms. Private banks have largely coalesced around mid-range figures for the Dollar, but outliers - the state-owned Commercial Bank of Ethiopia (CBE) at the low end and Hijira Bank at the high — have drawn attention to the growing spread.

Over the six days from March 3 to 8, 2025, the Birr has continued its decline against the Dollar, with the divergence in buying and selling rates becoming more pronounced. CBE and a handful of private banks have emerged at opposite ends of the spectrum, with official and posted rates showing a widening gap. At a Central Bank auction two weeks ago, CBE placed a bid as high as 135 Br to secure 25 million dollars, yet last week it posted the lowest buying rate at 124 Br. Hijira Bank, which bid 140 Br at the same auction to obtain two million dollars, set its daily buying rate at a comparatively higher 130 Br.

Most private banks have placed their buying rates around 128 Br, though there were exceptions. Goh Betoch posted 129.3 Br, while Tsehay Bank offered 125 Br, slightly above CBE’s floor. These two banks had previously led the forex market before recalibrating their positions. The trend has raised questions about the overall direction of the Birr, particularly as the average buying rate across commercial banks hovered between 127 and 128 Br last week, while selling rates settled in the range of 131 to 132 Br.

CBE’s lower posted buying rate has widened the gap with private banks, signalling a deliberate strategy to limit outflows while competing aggressively at official auctions. The selling side has been somewhat more uniform, with most banks clustering at the 131 to 132 Br mark, though minor daily variations reflect liquidity needs and internal forecasts.