Undersubscribed Dollar Auction Delivers a Rare Birr Rebound

Feb 21 , 2026.

Central Bank Governor Eyob Tekalegn (PhD) spent last week signalling he was ready to spend currency to steady the Birr, the “Brewed Buck”, and defend the narrow corridor in which it traded. His tool is front-loaded auctions big enough to jolt the market and buy time for harvest proceeds and donor inflows.

Only four days after the 70 million dollar sale, which was oversubscribed by 45 million dollars, the National Bank of Ethiopia (NBE) offered commercial lenders another half a billion dollars in an auction.

The Monday auction satisfied only a quarter of the bids, leaving most demand unfilled. Thirty-one banks queued up, while 21 walked away with allocations at a weighted-average rate of 155.12 Br to the dollar. The most successful bid was only two cents lower, at 155.10 Br, revealing how tightly the book was priced. The volume and narrow range around the clearing rate showed how auction outcomes now anchor expectations for the system.

By the weekend, a half-billion-dollar auction was needed to unclog the pipe and restore order. For the first time, it was undersubscribed by 44.71 million dollars, with all 30 banks buying at a weighted-average rate of 153.25 Br, lower by 1.87 Br from the previous auction. The undersubscription and price drop were unprecedented, signalling that the Central Bank’s toolkit had worked.

Across all 30 banks, the average rate was 152.99 Br on the buying side and 155.94 Br on the selling side.

Daily averages barely moved, inching from 152.93 Br on Monday to 153.11 Br on Saturday, while the average selling rate crept from 155.86 Br to 156.07 Br. The Brewed Buck depreciated by roughly 12 basis points over the week, still evidence of a supervised crawl rather than a rout.

The question is how much firepower will be required to keep the corridor intact through the lean season. Every jumbo sale could raise expectations for the next. Banks that paid 155.12 Br for a dollar would hesitate to sell below cost, and without fresh supply, retail quotes would rise, and premium banks may have to lift bids toward the corridor’s upper edge.

People selling hard currency found their best counterparty in Oromia Bank, whose bid climbed from 155.61 Br on February 16 to 156.22 Br on the last two days. Buyers chasing dollars could find relief at Dashen Bank, which asked 154.85 Br on five of the six days, while the state-owned Development Bank of Ethiopia (DBE) briefly undercut it on Tuesday with a 154.64 Br quote. The four-Birr gulf between these poles said more about scarcity than any headline average.

The state-owned Commercial Bank of Ethiopia (CBE) began the week as a laggard. On Monday and Tuesday, it paid only 151.61 Br for dollars and charged 154.64 Br, far below its peers. From Wednesday, it vaulted to 152.99 Br on the bid and 156 Br on the ask, rates that shadowed the industrial average to four decimal places. For a bank often used to signal policy, hugging the average looked deliberate, placing it in the middle of the pack.

If CBE now marks the middle, Oromia Bank and the Central Bank itself set the ceiling. Oromia’s 156.22 Br bid and 159.35 Br ask were the week’s highest, more than 2.8 Br above the market-average buying rate and 3.4 Br above the average selling rate. The Central Bank’s published line of 155.57 Br for both buying and selling, with a zero spread, served as a beacon rather than a dealer’s quote, and banks orbited it, padding on the mandated two-percent margin.

Meanwhile, four of the private big five banks - Awash, Abyssinia, Wegagen and Zemen - migrated into the upper half of the market. Their bids averaged 153.17 Br, 153.08 Br, 153.23 Br and 153.70 Br, each above the market average, and by Saturday, all were quoted north of 153 Br, near the policy reference.

Dashen Bank moved the other way. With its unchanging 151.81 Br bid and 154.85 Br ask, it became the market’s discount window, offering the cheapest dollars to buyers and the lowest Birr to sellers. By undercutting rivals, Dashen Bank’s foreign-exchange managers courted retail buyers and exporters, betting that their hard-currency pipeline could sustain the flow. Should supply tighten again, that bargain strategy could quickly prove costly, forcing it to reprice upward from a low base as the rest of the market shifts higher.

Amhara Bank opened Monday with a spread of 1.53pc, widened it to 1.72pc on Tuesday and then conformed to the standard two percent. Hibret Bank spent four days at a 152.17 Br buying rate before leaping to 153.14 Br on Friday and 153.44 Br on Saturday. Its selling rate topped 156.5 Br. At the basement end, the Cooperative Bank of Oromia (Coop Bank), Goh Betoch Bank, Global Bank, Nib Bank and Amhara Bank at the week’s start consistently posted the cheapest quotes. Coop Bank averaged 152.13 Br on the bid and 155.18 Br on the ask, with Global Bank hardly higher.

The market sorted itself into four camps. An anchor pair, embodied in the Central Bank’s fixed midpoint and Oromia Bank’s lofty quotes, determined the ceiling of the band. Beneath it sat a “premium private” bloc - Zemen, Amhara, Wegagen, Awash, Abyssinia, Hibret and Tsedey - clustered below the ceiling. A broad middle hugged the average, while Dashen, Coop, Global and Nib banks kept the discount corner alive for clients willing to shop around.

Aside from Amhara Bank’s Monday misstep, every lender maintained the spread at the mandated two percent. The uniform margin removes one avenue of volatility but forces banks to signal stress by shifting the whole quote instead. The market can thus appear tranquil even as auction outcomes send ripples through it, and small shifts in posted rates become the language through which banks express expectations.

That is why auction pricing has come to matter so much. The half-billion-dollar auction, with a weighted-average rate of 153.25 Br, revealed that the Central Bank’s comfort zone is around 153 Br. The largest private banks, but Dashen Bank, carried that signal straight to their counters. Dashen Bank’s discount bet assumed it could keep restocking dollars cheaply at or below that line. If the next auction is smaller, this position could backfire.

Despite the stimulative effects of large injections, the regime still resembles a tightly managed crawling band rather than the free float once promised by policy reformers. As long as bids and offers are pinned two percent above or below bank reference points, genuine price discovery is deferred to the auction floor. If the Central Bank’s supply sputters, retail quotes will adjust in days, not weeks, transmitting the shock through the four camps of banks and their customers.

For now, Governor Eyob has achieved his objective. Over the week, the Brewed Buck gained ground, spreads held firm, and banks stuck to the script. Whether that discipline survives the next scramble for greenbacks will be decided in the auction hall as much as at the teller’s window. Each large auction is another espresso shot, jolting rates awake before they settle back into the band. The latest shot was the strongest yet, and the caffeine is still circulating.

PUBLISHED ON Feb 21,2026 [ VOL 26 , NO 1347]