At the Forex Market, the Real Rate Stays Out of Sight

Jan 4 , 2026.

The foreign exchange market unfolded last week not as a battleground for price discovery, but as an orchestrated routine. The posted rates for the Brewed Buck, Birr, against the Green Buck displayed a steadiness that belied the mechanics beneath.

The average posted buying rate among banks crept from 152.32 Br to the dollar on December 29 to 152.48 Br by January 3, while the average selling rate moved from 155.26 to 155.42 Br to the dollar. This translates to a weekly depreciation of only 0.16 Br in the industrial average, a negligible slip, hardly a sign of instability. However, behind that calm, the range between the highest and lowest posted buying rates widened notably, reaching 3.50 Br by January 3, 2026, with the National Bank of Ethiopia (NBE) at 155.11 Br and Cooperative Bank of Oromia (Coop Bank) at 151.60 Br.

The notable change during the period was the identity of the price leader. Oromia Bank, often at the top in posted cash rates, was surpassed by the Central Bank, which pushed its reference buying rate to 155.10 Br to the dollar on January 2 and maintained that level the following day. The reversal was noteworthy as its zero-spread quote acts as a reference point, signalling where the authorities believe the market should clear, regardless of commercial banks’ willingness or ability to transact at that price in volume.

The Central Bank's year-end intervention set the stage. Its special auction on December 27, which moved 150 million dollars at a weighted average of 154.48 Br to the dollar, with 23 banks bidding, was a clear demonstration that Governor Eyob Tekalegn (PhD) remains ready to step into the market decisively when circumstances require. This active posturing on foreign exchange management, rather than a hands-off approach, was evident in the rate tables that followed.

The industry average edged up, but without the sweeping repricing expected from a major supply shock or sharp policy shift.

Disparities within the private banking tier, particularly among the big five (Awash, Abyssinia, Dashen, Wegagen, and Zemen), were more revealing. Contrary to expectations that these banks would move in tandem, Zemen Bank set itself apart, posting a buying rate of 153.21 Br on January 3, well ahead of Awash at 151.69, Dashen at 151.65, Abyssinia at 152.20, and Wegagen at 152.04 Br. For most of the week, Zemen Bank’s rate stayed near the group's, but on January 2 it jumped and held there the next day, with its selling rate following suit at 156.27 Br.

This was not a marginal move. Zemen Bank’s buying rate increased by 1.56 Br over the week, far exceeding the incremental “crawl” of the others, including Abyssinia, Dashen, Wegagen, and Awash banks, whose adjustments stayed near a few cents. Zemen Bank’s outlier status unveiled factors at play beyond the norm, perhaps balance-sheet positioning, the desire to attract dollar inflows, or a strategy to relieve pressure within a system that resists coordinated changes.

Banks with particular exposure to dollar shortages, or those courting remittance flows, may post higher rates to draw in customers, even if actual trades remain rationed. The pattern revealed that, in a tightly managed system, a few financial institutions are tasked, formally or not, with taking visible steps that allow the average to move, sparing others the reputational risk of depreciation.

This stepwise behaviour also surfaced in smaller banks. Tsehay Bank’s posted buying rate increased by 1.02 Br, Nib Bank's by 0.65 Br, and Sidama Bank's by about half a Birr compared to last week. These banks, while not dominant, demonstrated a greater willingness to make marked adjustments, in contrast to the larger competitors, which largely resisted leading the climb.

However, some banks barely moved. The state-owned Commercial Bank of Ethiopia (CBE) held its buying rate flat at 151.61 Br, matching the Coop Bank. This anchored the lower end of the spectrum. Others followed, showing marginal changes and reinforcing a system where the bottom tier sets a visible floor. Outliers are more conspicuous, signalling either acute dollar scarcity, strategic positioning, or both.

Weekly highs and lows sharpened this view. The top posted buying rate was Central Bank at 155.11 Br on January 2 and 3; the lowest was Tsehay at 150.73 on December 29. On the selling side, Oromia Bank topped out at 158.11 Br on January 3, while Tsehay’s 153.75 Br marked the week’s low. After December 31, Coop Bank’s 151.60 and 154.64 Br became the daily floor for buying and selling, respectively, revealing that early-week low quotes were not sustained.

Beyond the official market, a separate reality operates. CBE’s practice of offering a 10 Br premium above its posted buying rate acknowledges that the official rate cannot always attract dollars from the market. Even more evident is the rate offered by overseas money transfer operators, such as Ria, which posted a buying price of 182 Br to the dollar last week. This is not only a premium over local rates. It signalled a parallel market shaped by diaspora demand, speed, and the realities of dollar scarcity. The gulf between the official board rates and these remittance channels is substantial, unveiling market segmentation and a continuing contest over where the “real” exchange rate lies.

The approach postpones genuine price discovery, distributing adjustment across days and banks to dilute the shock and minimise political fallout. The Central Bank’s hand remains visible, managing the process through a combination of auctions, reference rates, and careful signalling.

Understanding the current market requires looking at behaviour classes rather than mere numbers.

There are the anchors, like the CBE and Coop Bank, who keep their rates fixed to provide a visible floor and avoid being blamed for depreciation. The crawlers, including Awash, Dashen, Abyssinia, and Wegagen banks, made only small daily moves. The jump-adjusters, led by Zemen Bank, made discrete upward adjustments. Finally, the benchmark-setter, the Central Bank, with its zero-spread quote and auction activity, actively conditions the market’s direction.

The anomalies were most apparent within what is assumed to be a homogeneous group. The big five did not move as one. Zemen Bank’s decoupling was evident, revealing that the system’s calm at the macro level is achieved by unevenly spreading pressure at the micro level. The Central Bank’s year-end liquidity injection may help explain the lack of broader volatility, but the observed dispersion among banks points to specific constraints, customer bases, and risk appetites.

The week’s evidence uncovered a managed corridor in which authorities calibrate depreciation through select financial institutions, allowing gradual movement without open turmoil. In many countries, a week of currency depreciation would indicate stress, such as capital outflows, import demand, or policy mistakes. In Ethiopia, it looked more like choreography. The Brewed Buck weakened, but in a deliberate and predictable rhythm.

Rate increments were small and coordinated; spreads were nearly uniform. The market did not break out of its range. Rather, it was guided along a controlled path.

Competition was limited and constrained within bounds. The highest-selling rates, by Oromia, Zemen, and Lion banks, went up above 156 Br and approached 158 Br by early January. At the lower end, CBE, Coop Bank, Awash, and Goh Betoch stayed around 154.6 to 154.8 Br. The rankings barely changed, with no meaningful undercutting.

Most banks’ buying rates rose by two Birr to 2.4 Br over the week, with selling rates tracking closely. The daily movement, between 0.35 Br and 0.45 Br, was regular and unremarkable. None of the banks appeared to have taken a gamble on policy direction; the signal had been delivered. The system followed suit, delivering depreciation without panic and adjustment without creating arbitrage opportunities.

However, the adjustment’s distribution was uneven. Zemen Bank absorbed more depreciation than nearly the rest of the market combined, with Sidama Bank trailing. Meanwhile, most banks barely participated, holding steady or making only token moves.

PUBLISHED ON Jan 04,2026 [ VOL 26 , NO 1340]