Central Bank Puts $60m on the Auction Block

The National Bank of Ethiopia (NBE) is set to hold a foreign exchange auction tomorrow, February 25, 2025, offering 60 million dollars to commercial banks.

Monetary authorities say they want to manage excess liquidity, stabilise inflation, and help ease the currency shortages that have weighed on the private sector. A statement issued by the Central Bank today attributed the improvement in the balance of payments to rising export revenues, steady remittances, and stronger capital inflows. A surge in gold deliveries, where the Central Bank is the sole authorised exporter, pushed foreign currency reserves beyond earlier expectations, the Bank stated.

While higher inflows are “positive,” the Central Bank cautioned that they need to be managed carefully to avoid excessive monetary growth and inflationary pressure. Officials described the auction as part of a “prudent” monetary policy intended to improve foreign exchange market liquidity. The Bank also said it will watch market conditions closely and may conduct more sales if needed to maintain price and external stability.

Tomorrow’s forex auction follows the one in August 2024, when foreign exchange was sold at an average rate of 107.9 Br a dollar. At the time, the Central Bank sought to keep the Birr from slipping further and to meet a growing demand for dollars. Birr was exchanged at an average rate of 125 Br last week on the official market.