The Brewed Buck's persistent depreciation against the U.S. Dollar persisted over the past week, demonstrating an ongoing struggle with foreign currency shortages and mounting import pressure. The Birr weakened steadily across most commercial banks, with slight yet consistent daily upward moves in buying and selling rates. The trend reflects market expectations of sustained devaluation and uncertainties over the economy's turmoil, characterised by a liquidity crunch on the domestic front.

Last week, Birr's buying rate averaged 119.25 against a dollar, while the selling rate stood at an average of 121.55.

Most banks maintained a regulatory two percent spread between buying and selling rates, signalling a competitive yet constrained foreign-exchange market. However, the Central Bank exhibited outlier activity with a notably lower spread, ranging from 0.79pc to 1.34pc, compared with the market standard. This reduced spread reveals the Central Bank's distinct role in attempting to stabilise the Brewed Buck during a weakening trend, using tighter margins to moderate fluctuations.

According to analysts, the National Bank of Ethiopia (NBE) may try to respond to currency volatility while acknowledging the overall devaluation trajectory. However, they caution the effectiveness of such interventions, which could be limited when private and commercial banks offer more competitive rates. Last week, the state-owned Commercial Bank of Ethiopia (CBE) and Oromia International Bank (OIB) emerged as outliers, adopting divergent strategies targeting forex scarcity.

CBE, the largest financial institution in the country, began the week with relatively lower exchange rates than its competitors. On October 21, its buying rate was 113.13 Br, markedly below the market average, and its selling rate was 115.39 Br. Three days later, the Bank sharply adjusted its rates upward by 3.07pc, with the buying rate climbing to 116.66 and the selling rate reaching 119.00, inching closer to its peers.

The abrupt shift could reveal a recalibration by CBE, possibly driven by the need to remain competitive as private banks offered higher rates, attracting customers seeking better deals on foreign currency. The initial reluctance to match prevailing rates may indicate a strategic lag or an implicit policy to limit currency outflows at lower rates before adjusting to market levels.