Forex Auction Uncovers a Market Under Pressure

May 23 , 2026.

Last week, the Birr - Brewed Buck - crossed a line the foreign-exchange market had long treated as a warning, not a price. Commercial banks’ cash rates reorganised around a reference point of 160 Br threshold, which was crossed in auction bidding and breached in some posted rates.

The trigger was the Central Bank’s auction on May 19, 2026, the largest since April 2025. The Central Bank allotted half a billion dollars, accepted bids as high as 160.9 Br, although settled at a weighted average of 159.9 Br, and recorded a lowest successful bid of 157.3 Br.

Demand was roughly twice the supply. Thirty of the 32 banks submitted bids, but fewer than half received allocations. The shortage remains structural, tied to obligations banks struggle to clear, especially import-financing commitments and fuel purchases through the Ethiopian Petroleum Supply Enterprise (EPSE). Although the auctioned currency was unrestricted, arrears kept demand elevated while importers pressed banks for allocations.

When the Central Bank opened its auction window in April 2025, then Governor Mamo Mehiretu called it a way to “ensure stability of the exchange rate, maintain external stability and provide part of the Central Bank’s foreign exchange accumulation to the private sector”. The first auction offered 50 million dollars, when the official exchange rate was around 55 Br. Later sales ranged from 70 million dollars to 80 million dollars. The previous auction, on February 21, reportedly offered 70 million dollars, drew demand three times the supply, and cleared at 153.25 Br. Successful bids ranged from 154.5 Br to 158.5 Br.

Last week's sale was more than six times larger, yet confirmed a move toward 160 Br.

The cash-rate data between May 18 and May 23 showed an uneven pass-through. Excluding the Central Bank's reference quote, the average commercial-bank buying rate increased from 154.51 Br on May 18 to 155 Br on May 23. The average selling rate increased from 157.6 Br to 158.26 Br, a change of 0.57 Br on the buying side and 0.65 Br on the selling side. The median buying rate moved from 154.48 Br to 154.55 Br, and the average selling rate from 157.57 Br to 157.64 Br. Most banks barely shifted, while the outliers lifted the average.

Oromia Bank has established its place as the undisputed price leader. It began above the market, posting a buying rate of 157.6 Br and a selling rate of 160.75 Br on May 18. By May 21, buying was 161 Br. By May 22 and May 23, it quoted 161.88 Br for buying and 165.12 Br for selling, the week's highest quote. Its buying rate jumped by 4.27 Br, above the industry average and the Central Bank’s May 23 reference of 158.17 Br.

Wegagen Bank moved abruptly, buying dollars at 154.59 Br on May 18 and May 19, then jumped to 160.75 Br on May 20, up more than six Birr. It later settled at 159.62 Br from May 21 to May 23. Its 5.02 Br six-day rise was the largest. Its selling rate jumped from 157.68 Br to 163.97 Br on May 20, then eased to 162.81 Br for the final three days. Wegagen Bank's forex managers behaved as if the auction had revealed a new clearing reality.

At the lower end, Hijira Bank posted the lowest daily buying and selling rates, unchanged at 153.82 Br for buying and 156.89 Br for selling. By May 23, the gap between Oromia Bank’s buying rate and Hijira Bank’s had widened to a little over eight Birr. The selling-rate gap was 8.22 Br, a spread that revealed banks priced foreign exchange based on liquidity, client pressure, risk appetite, and expectations.

The state-owned Commercial Bank of Ethiopia (CBE) was cautious. Its buying rate increased from 154.01 Br on May 18 to 154.17 Br on May 23, a gain of 0.16 Br. Its selling rate moved from 157.1 Br to 157.26 Br. CBE stayed below the commercial-bank average and far below Oromia and Wegagen. The comparison could be incomplete because CBE, like some of its competitors, offers top-up incentives outside posted cash rates.

Other large private banks, such as Awash, Abyssinia, Zemen and Dashen, crawled in controlled moves, rather than resets.

Awash Bank lifted its buying rate from 154.21 Br to 154.87 Br, up 0.65 Br. Bank of Abyssinia moved from 154.9 Br to 155.35 Br, up 0.45 Br, while Dashen Bank jumped up by 0.12 to 154.11 Br. Zemen Bank, which started at 155.57 Br, edged up to 155.7 Br.

A second group moved visibly but stayed below the outlier zone. Hibret Bank increased its buying rate from 155.63 Br to 156.94 Br, while its selling rate jumped from 158.74 Br to 160.08 Br. Addis Bank raised its buying rate from 154.54 Br to 155.85 Br, while Sidama Bank raised its buying rate from 154.04 Br to 154.84 Br. None crossed the psychological threshold of 160 Br.

A third group remained sticky, including Amhara Bank, Global Bank, Anbessa Bank and Hijira Bank. Their stability may reflect limited appetite for cash foreign exchange, liquidity constraints, non-posted incentives, or a wait-and-see attitude, pointing to administrative pricing, balance-sheet rationing and client-specific allocation practices.

Several anomalies sharpened the picture. Berhan Bank’s buying rate stayed fixed at 154.87 Br throughout the week, while its selling rate increased to 159.96 Br on May 23. The one-sided adjustment may be compelled by defensive pricing on dollar sales. The Central Bank’s posted rate also sent mixed signals. The domestic monetary effect was substantial. At a weighted average of 159.9 Br, a half-billion-dollar auction implies nearly 79.5 billion Br collected from banks.

The dollars relieve foreign-currency obligations, while the Brewed Buck paid to the Central Bank removes local liquidity. The auction eased one shortage while tightening another, although a larger supply has not neutralised pressure.

The average rate changed only moderately because most banks remained near the mid-154 Br level, while the frontier shifted sharply. Oromia and Wegagen banks priced closer to the auction’s clearing rate, while the lower half remained sticky. The market is split between banks treating 160 Br as reality and others anchoring published rates around the older band.

The Birr has not collapsed in the posted cash market. Most banks remain clustered around 154 Br to 155 Br for buying. Yet the most aggressive participants have entered another zone. The auction crossed 160 Br. Oromia Bank posted above 161 Br. Wegagen hovered close to 160 Br. The banking industry should decide whether to follow, resist, or disguise the adjustment. The next auction will likely be less of a routine liquidity operation than a test of supply and the exchange-rate anchor.

PUBLISHED ON May 23,2026 [ VOL 27 , NO 1360]