The Brewed Buck on the Boil as Banks Push Dollar Higher, Central Bank Holds Back

Jul 13 , 2025.

The Birr (the Brewed Buck) continued its slow retreat in the retail forex market last week, losing ground in quiet increments as commercial banks edged their dollar quotations higher. The panel average for buying dollars crept to about 134.9 Br from 134.1 Br, while the companion selling quote rose to roughly 137.6Br, jumping by almost one Birr.

That five-day move, about seven-tenths of a percent in mid-market terms, added to the 1.3pc slide logged over the preceding six trading sessions.

The erosion has unfolded while the Central Bank kept its auction window shut. It has not floated its bi-monthly foreign-exchange tender since June 19, 2025, when it sold 50 million dollars at a weighted-average rate of 136.62 Br.

With no fresh supply on tap, commercial banks have had to meet demand on their own. That was in sharp contrast to the period between June 7 and June 12, when the Birr held inside a tight 131.2 Br-to-132.8 Br range and official sales helped steady the market.

Price leadership has been on the shoulders of forex managers at the Oromia Bank. On July 10, they pushed their posted buying rate to 137.31 Br and kept that level through July 12, while listing a public selling quote above 140.05 Br. Since the start of the month, Oromia Bank’s dollar price has advanced from 135.00 Br, implying a 1.26pc depreciation for the Birr. Week-by-week moves of 0.82 Br, 0.93 Br, and 0.55 Br show how persistent the upward pressure has become.

At the lower end of the board, Amhara, Gadaa and ZamZam banks have kept bids below the market average of 134.5 Br. ZamZam slipped to 132 Br on the morning of July 12, overtaking Commercial Bank of Ethiopia (CBE) as the cheapest buyer. The state-owned giant has been immobile for weeks, posting the same figures of 131.51 Br to buy and 134.14 Br to sell.

Market watchers read the frozen quote as a deliberate anchor meant to project stability in official channels even while private lenders edge higher.

Spreads tell another story, as almost every bank held a two percent margin between buying and selling prices, a result of an official guideline. The only sustained deviation came from the Central Bank itself, which shaved its retail spread from 0.52pc on July 7 to zero by July 11 and July 12, quoting 136.92 Br bid and 136.92 Br offered. Wegagen Bank briefly followed suit on July 9, printing 134.31 Br both ways before restoring the industry-standard cushion.

On July 7, the 27-bank average showed a buying rate of 134.1 Br and a selling rate of 136.8 Br. By July 12, these figures had reached 134.9 Br and 137.6 Br. The narrower 25-bank panel tracked tells the same story: an average buying-rate increase of roughly 0.8 Br mirrored by the selling quote.

Looking further back, the Central Bank's retail posting has moved from 134.68 Br to 136.92 Br over the past four weeks, a 1.66pc rise, while the industry composite has climbed from 132 Br to 133.39 Br, a 1.05pc gain.

The divergence between policy and market prices has sharpened since early June. During the brief calm from June 7 to June 12, rates across the banks barely strayed outside a one-and-a-half-Birr corridor. Oromia Bank then began to inch ahead, and by mid-July the gap between its bid and CBE's had stretched to nearly six Birr.

Oromia Bank and the Central Bank made their sharpest adjustments in the final week of June. Other private banks' dollar quotes rose by 0.93 Br in that stretch, while the Central Bank lifted its own posted rate by 1.78 Br. Across the industry, the Brewed Buck lost between 1.05pc and 1.66pc of its value against the Green Buck over the past four weeks, depending on the series used.

Even the big fives — Awash, Abyssinia, Dashen, Wegagen and Zemen — now cluster around a higher 134.5 Br mean, signalling consensus that the Brewed Buck should trade above its previous plateau.

Analysts point to familiar forces of strong demand on imports, yet export proceeds and diaspora remittances have not kept pace. With the Central Bank absent from the tender pit for two weeks now, speculative buying appears to have grown, especially toward year-end when businesses close books and debt service.

Market watchers point to four overlapping drivers reinforcing one another. Robust import demand, expectations that the Central Bank may eventually recalibrate the official rate, delays in loan and aid inflows, and speculative positioning by traders betting on further weakness. Each strand feeds the next, creating a feedback loop that nudges quotations higher even on otherwise quiet trading days and keeps dealers reluctant to release scarce notes.

For the moment, the forex market remains orderly, and banks report no cash shortages. Yet, the message of the past six trading days is plain. Unless Governor Mamo Mehiretu displays his firepower and the Central Bank resumes its tender, the Birr's erosion is likely to continue at its current modest but steady pace.

PUBLISHED ON Jul 13,2025 [ VOL 26 , NO 1315]