Brewed Buck Keeps Falling Quietly on Policy's Terms

Dec 20 , 2025.

The official foreign exchange market showed signs of tightly calibrated depreciation over the past week. Despite a superficial calm, rates inching upward in decimal movements, the underlying mechanics revealed a system in flux, with a banking industry heavily regulated and a currency delicately managed by the Central Bank.

Both sides of the quote crept upward, buying rates from roughly 151.5 Br to 152.7 Br to the dollar, selling rates from about 154.5 Br to 155.8 Br. However, the climb was measured in pennies, not Birr. Across the stretch, the average buying rate edged from 152.19 Br on December 15 to 152.30 Br on December 20. The average selling rate nudged from 155.13 Br to 155.23 Br. The weekly average landed at 152.26 Br and 155.20 Br, respectively, barely a tenth of a Birr higher than where they began.

Behind the soothing façade lay an unmistakable downward pull on the Brewed Buck. The market saw the Birr weaken in what market watchers call a “managed crawl,” a policy choice designed to bleed off pressure without the jolt of a one-shot devaluation. As rates drifted, the market revealed an internal hierarchy.

At the low end, Tsehay Bank bought dollars at 150.69 Br and sold at nearly 153.71 Br on December 20, the week's cheapest quotes. At the high end was Oromia Bank, offering to sell at 158.03 Br on December 19 and again on December 20, even as its buying quote on Saturday was 154.94 Br. Yet the most telling price was posted by the National Bank of Ethiopia (NBE).

The Central Bank listed a buying rate of 154.98 Br, and, unusually, exactly the same figure on the selling side, implying a zero spread. By skipping the fee every other bank charged, the Central Bank planted itself at the top of the table and became the market’s new ceiling. Whether it does much day-to-day business at that rate is beside the point. Its quote remains a signal, as these higher levels are policy-consistent, and commercial banks fall in line.

That top-heavy signal produced an odd inversion further down the curve. On December 20, the five largest private lenders (Awash, Bank of Abyssinia, Dashen, Wegagen, and Zemen) were in the market, buying dollars at below 152 Br. Awash posted 151.64, Abyssinia at 151.95, Dashen at 151.58, Wegagen at 151.98 and Zemen at 151.63. The state-owned bank, Commercial Bank of Ethiopia (CBE), posted similar figures. Big balance sheets, usually thought to command the firmest bids, were in fact the most conservative.

A middle cluster set the daily mean, quoting roughly 152.1 and 152.7 Br for buying. Addis International Bank posted 152.38 Br; Berhan, 152.47 Br; Bunna, 152.01 Br; Enat, 152.27 Br; Goh, 152.44 Br; and, Gadaa, 152.45 Br. Their behaviour unveiled neither acute scarcity nor abundant supply, only a willingness to match the posted average.

Only two commercial banks occupied the upper fringe. Siket Bank bid 154.31 Br and asked 157.40 Br. Oromia Bank’s high print, shy of 158 Br, set the commercial peak. But both sat below the Central Bank, whose rate had become a kind of official lighthouse. Undoubtedly, the Brewed Buck has been sliding, but it is sliding inside a corridor of a low end defined by banks like Tsehay and a pack of conservative quoters, a middle that moves by cents at a time, and a high end increasingly defined by the Central Bank’s own quote and the auction mechanism.

While retail counters inched along, the real price action took place at the Central Bank's forex auctions. The latest round cleared at 154.77 Br, up from 154.39 Br two weeks earlier. The trajectory was evident that 135.61 Br was the weighted average back in February’s special auction, low 130s in April and May, mid-130s in June, a step to 148.10 Br when the auction size expanded in October, and now the mid-150s. Only 13 banks secured dollars at the most recent sale, concentrating access in the hands of larger banks.

That auction benchmark was more than two and a half Birr above the average retail buying quote, revealing a system in which official supply, administrative spreads, and limited interbank trading allowed pockets of mis-pricing to persist. What the forex market uncovered is not a market discovering a price, but a system negotiating one.

Why do the heavyweight private banks stay on the conservative side, despite wholesale prices being much higher?

Market watchers provide several overlapping explanations. Keeping posted buying rates low helps ration customer demand when inventories are thin. It also signals confidence that they would win dollars at official auctions. And mindful of headline inflation and public optics, they may quietly favour restraint. The near-universal two percent spread between buying and selling rates and tight clustering imply that pricing freedom is constrained by regulation as much as by market forces.

Smaller and second-generation banks mirror the giants almost faultlessly, reinforcing what market watchers believe is strong and implicit regulatory coordination. Dispersion has marigan. On any given day, selling quotes fall within a 30- to 40-cent band, an extraordinary level of uniformity for a market starved of foreign currency.

The trends over the weeks show carefully rationed change, a currency edging lower under close supervision, rather than one finding its level through open market forces. The Central Bank’s auctions, where prices rise in deliberate steps, winners narrow and liquidity pools in fewer hands, have become the real engine of depreciation. Retail counters, by contrast, serve as the façade of stability, broadcasting order even as policy encourages the reference rate to be higher.

Concentrating dollar access can entrench institutional disparities. And sustaining a gap between retail windows and wholesale benchmarks may preserve the very premiums the authorities hope to squeeze out. Yet the strategy also offers benefits. It moves the official rate closer to the parallel market, where the dollar trades above 180 Br, without letting retail quotes bolt.

For now, the approach appears to be working. The Birr’s slide is modest, volatility is muted, and banks report no sudden rushes at the counter. Whether that calm can last as auction rates climb deeper into the 150s and beyond remains the unanswered question. The Brewed Buck has been on the move, not at the market’s pace, and not on its terms.

PUBLISHED ON Dec 20,2025 [ VOL 26 , NO 1338]