Last week, Hijira Bank posted a buying rate of 126.5 Br to the dollar, marking what industry observers described as a historic milestone. In an even more striking move, the Bank also offered the most expensive Dollar exchange at 129 Br, signalling its increasingly aggressive posturing in capturing foreign currency inflows. The state-owned Commercial Bank of Ethiopia (CBE) posted the lowest buying rate at 124 Br and the lowest selling rate at 126.48 Br, cementing its continued role as a market stabiliser.
According to observers familiar with the latest shifts, CBE’s comparatively conservative approach showed an effort to rein in market volatility when the gap between the highest and lowest rates appears to be widening.
Zemen Bank, widely regarded as one of the top-tier private financial institutions, joined the band of fourth-generation lenders pushing beyond the long-standing psychological threshold of 125 Br. Smaller fourth-generation banks such as Tsehay, Gadaa, and Goh Betoch led the market with bold forex pricing, consistently offering the highest rates for over six weeks. According to analysts, their strategy reflects a growing urgency to secure forex liquidity by appealing to forex holders with premium bids.
However, smaller lenders continue to lead the charge.
Tsehay, Gadaa, and Goh Betoch have consistently staked out the most aggressive positions, hoping to attract the limited flows of hard currency passing through official channels. First-generation private banks, from Dashen to Abyssinia to Wegagen, may avoid similar moves, preferring steadiness or, as some industry insiders assert, adhering to tacit directives preventing runaway depreciation.
In a market where the Birr (Brewed Buck) faces persistent downward pressures against the U.S. Dollar (Green Buck), these newer and smaller banks appear more inclined to take on risk to meet their liquidity needs.
The largest private banks, including Dashen, Awash, Abyssinia, and Wegagen, remain relatively reserved. For weeks, their rates were below 125 Br, signalling a cautious position designed to maintain stability rather than chase short-term gains. Market observers believe these established banks, wielding larger capital bases, can afford to be less aggressive in pricing. Others point to the “invisible hands of policy” behind their conservative posturing, a sign of regulatory pressures in tempering how far they are willing to push rates.
Between February 3 and 8, 2025, the Brewed Buck continued its gradual descent against the Green Buck, with industry-wide average buying rates inching upward and surpassing the 126 Br mark for the first time. This consistent climb has raised new concerns over the declining value of Brewed Buck. Observers caution that the depreciation resulted not only from competitive bank strategies, but also a symptom of broader macroeconomic stressors, including the persistent forex shortages, the burden of servicing external debt, and inflationary pressures eroding real incomes.
Although CBE executives remain steadfast in their attempts to moderate the market by offering lower rates, the overall trend shows that the Brewed Buck will further weaken in the weeks and months to come.
Recent indicators show that even the Central Bank’s rates have moved past the 125 Br level, aligning official figures more closely with the higher levels posted by private banks. Analysts interpret this as a sign that monetary authorities are increasingly willing to adjust policy mechanisms to mirror market realities, or at least to narrow the gap between the official and parallel market rates.
Regardless of the underlying motivations, Birr’s slide shows no immediate signs of reversing course. Unless decisive policy interventions alleviate structural imbalances, such as boosting foreign reserves or inflationary fiscal policies, the Brewed Buck is likely to continue its downward path, testing the financial sector's resilience.
PUBLISHED ON
Feb 09,2025 [ VOL
25 , NO
1293]
Dec 22 , 2024 . By TIZITA SHEWAFERAW
Charged with transforming colossal state-owned enterprises into modern and competitiv...
Aug 18 , 2024 . By AKSAH ITALO
Although predictable Yonas Zerihun's job in the ride-hailing service is not immune to...
Jul 28 , 2024 . By TIZITA SHEWAFERAW
Unhabitual, perhaps too many, Samuel Gebreyohannes, 38, used to occasionally enjoy a couple of beers at breakfast. However, he recently swit...
Jul 13 , 2024 . By AKSAH ITALO
Investors who rely on tractors, trucks, and field vehicles for commuting, transporting commodities, and f...
Apr 26 , 2025
Benjamin Franklin famously quipped that “nothing is certain but death and taxes....
Apr 20 , 2025
Mufariat Kamil, the minister of Labour & Skills, recently told Parliament that he...
Apr 13 , 2025
The federal government will soon require one year of national service from university...
Apr 6 , 2025
Last week, the International Finance Corporation (IFC), part of the World Bank Group...
Loading your updates...