Forex Auction Sends One Signal, Banks Send Another

Jun 21 , 2026.

The Birr (Brewed Buck) refused to fall into line last week, as the cash market for dollars resisted the convergence the Central Bank had tried to engineer.

Its latest foreign-exchange auction, held last week, was meant to reset expectations after the National Bank of Ethiopia (NBE) cancelled the June 9 auction, the first such cancellation since the liberalisation of the forex exchange regime in August 2024. Yet commercial-bank quotations last week demonstrated a market driven less by any tidy auction outcome than by bank caution, dollar scarcity, uneven liquidity and appetite for hard currency.

The latest auction on June 16, 2026, laid the tension bare. Commercial banks submitted bids worth 236.30 million dollars against the 100 million dollars the Central Bank put on offer, demand exceeding supply by 136pc. Only eight of the 16 banks that bid walked away with allocations. Oversubscription on that scale would normally validate a weaker Birr. Instead, the weighted-average auction rate settled at 158 Br to the dollar, 1.62 Br lower than the previous auction.

For those observing the forex market, heavy rationing had produced a firmer official clearing price, the week's first and most telling contradiction.

The cash postings told a less reassuring story. Across last week, the average buying rate drifted up from 157.39 Br on June 15 to 157.93 Br on June 20, while the average selling rate jumped from 160.43 Br to 160.98 Br, a weakening of about 0.54 Br on the buying side and 0.55 Br on the selling side. Stripping out the Central Bank's zero-spread postings, commercial banks averaged 157.56 Br for buying and 160.69 Br for selling.

The rates posted on June 20 rewarded care. Including every posted rate, the buying average was 157.93 Br. Excluding the Central Bank, it eased to 157.90 Br. Excluding both the Central Bank and Oromia Bank, the high-side outlier, it fell to about 157.72 Br, close to the 157.71 Br industry average seen last week. Oromia Bank's quote lifted the headline average, while Tsehay, Hijra, and the state-owned Commercial Bank of Ethiopia (CBE) anchored the floor.

Oromia Bank was the clearest outlier in the forex market. It posted a buying rate of 162.73 Br and a selling rate of 165.99 Br every day last week, and no other bank came close. Its selling quote, unchanged throughout last week, exceeded the lowest selling rate by 8.40 Br, while its buying quote sat 8.24 Br above Tsehay Bank's 154.49 Br, the lowest buying offer each day. A range that wide revealed a segmented system in which prices reveal strategy as much as they do market-clearing.

At the floor, Tsehay Bank bought at 154.49 Br and sold at 157.58 Br throughout, with Hijra Bank only marginally higher at 154.52 Br and 157.61 Br. CBE held the lower tier as well, even after raising its buying quote from 155.01 Br to 156.01 Br over the week, leaving the state bank nearly 1.88 Br below the commercial-bank average on the final day. Its headline posting was a poor proxy for the effective acquisition price if top-up bonuses attract dollar sellers.

The Central Bank's rate fell from 159.41 Br on June 15 to 157.99 Br on June 16, almost matching the auction's 158 Br, before climbing to 158.87 Br by June 19 and holding there. Yet private banks, for the most part, did not follow it downward after June 16. The auction had supplied a price, but it had not supplied a cure for scarce cash dollars.

The large private banks have scattered, such as Awash Bank, which raised its buying rate from 155.83 Br to 156.9628 Br. The Bank of Abyssinia (BOA) raised its rate from 156.26 Br to 157.33 Br, and Dashen from 155.66 Br to 157.35 Br. Zemen jumped from 157.29 Br to 158.08 Br, after earlier cutting its buying rate to about 158.08 Br from 159.34 Br the week before, an unusual posturing for a domestic private bank competing for hard currency.

Wegagen Bank was the exception, frozen at 159.62 Br for buying and 162.81 Br for selling. With the implied previous auction rate of 159.62 Br, recovered by adding back the June 16 decline, sitting almost exactly on Wegagen Bank's quote, the Bank looked anchored to the old reference.

The sharpest jolt came from Amhara Bank. It held its buying quote at 154.51 Br from June 15 through June 19, then leapt to 159.58 Br on June 20, with its selling rate climbing from 157.6 Br to 162.78 Br. A one-day move of more than five Birr was too large to pass as ordinary price discovery. It was a reset, a stale-posting correction, or a shift from the low-price group into the premium cluster. Gadaa Bank made a late adjustment, raising its buying quote from 154.55 Br to 155.87 Br, while Dashen Bank's final-day rise, from 156.85 Br to 157.35 Br, was smaller but commercially telling.

Four patterns surfaced from banks' behaviour last week.

One cluster, led by Oromia Bank and joined by Wegagen, Goh Betoch, Berhan, ZamZam and Siinqee banks, stayed above the average or barely moved while holding high buying rates, signalling stronger demand for inflows or a willingness to pay. A second group, taking in Awash, Abyssinia, Dashen, Zemen, CBE, Hibret, Abay and several mid-tier names, repriced gradually, declining to cut after the Central Bank's lower auction price and instead nudging rates up while preserving the two percent spread convention. A third, including Tsehay, Hijra, CBE, Siinqee and Nib banks, posted low headline rates that were uncovered at lower urgency, with other incentives or acceptance of weaker inflows.

The fourth group was anomalous. The Central Bank belonged there by virtue of its zero-spread and reference-role functions. Hibret Bank briefly posted a zero spread on June 17, buying and selling at 158 Br before reverting to a normal commercial spread. Abay Bank narrowed its spread to 1.81pc on June 16, while Cooperative Bank of Oromia (Coop Bank) widened its spread to 2.65pc on June 19 after cutting its buying rate and raising its selling rate.

Selling rates mostly mirrored buying rates under the spread convention, leaving the buying quote as the real tell of how hard a bank chased dollars. By that measure, Oromia Bank was easily the most aggressive, Tsehay Bank the least, and the large private banks clustered in between. The Brewed Buck weakened modestly in posted cash even as the auction produced a stronger rate, because demand outpaced supply, allocations were rationed, and only half the bidders left with foreign exchange.

What remains is a liberalised market still hunting for a credible price signal. The auction projected confidence in a firmer Birr, while the postings answered with guarded scepticism. Averages crept, extremes refused to narrow, banks froze or abruptly corrected quotes, and the Oromia-Tsehay gap held above eight Birr throughout. The foreign-exchange market is no longer fixed in the old sense, yet way the markte is managed has shown that it is not fully market-clearing either.

It is, for now, a rationed market wearing liberalised quotations, where the dollar's price is set as much by access and expectation as by the auction itself.

PUBLISHED ON Jun 21,2026 [ VOL 27 , NO 1364]