Forex Calm Masks a Market on Administrative Watch

Jan 17 , 2026.

The foreign exchange market continued to present a telling picture of a system guided more by administrative measures than by the spontaneous market forces of price discovery.

The most remarkable aspect of last week was the lack of volatility. Even though the foreign exchange market was clearly under strain, that pressure did not manifest in competitive pricing, wider spreads, or dramatic rate swings. The major private banks stayed close together, spreads stayed fixed, and the Central Bank’s buying rate remained the highest, acting less as a participant and more as a guidepost. The real risk in this arrangement was that imbalances are being absorbed administratively, hidden beneath a calm surface, and may surface suddenly if pressures intensify.

The Birr (Brewed Buck) continued to lose ground against the dollar (Green Buck), yet the manner and rhythm of this depreciation offered insight into a tightly managed process rather than a free market in turmoil. The Birr’s value slid downward in small, almost predictable increments. The daily changes in both buying and selling rates were modest, usually only a few cents, but their effect accumulated over the week.

On average, the buying rate settled near 152.6 Br to the dollar, while the selling rate was consistently about three Birr higher. This gap mirrored the strictly maintained two-percent spread that has become the norm among banks. Notably, this spread never wavered during the week, a point of interest, as in times of market stress, the spread between buying and selling rates is often the first margin to move, widening to compensate for uncertainty and risk.

The behaviour of the largest private banks was even more notable. Awash, Abyssinia, and Wegagen moved almost in lockstep. Their daily rate changes were nearly identical, despite these banks differing in their capital base, access to correspondent banks, and customer profiles. Dashen Bank, another major player, did not join this synchronised movement, though it did not chart a radically different course. Its buying rates were about 0.10 Br higher than the state-owned Commercial Bank of Ethiopia (CBE), a slightly more cautious approach, but still well within the established corridor. Neither was Zemen Bank in the same band, for its buying rate last week was 153.53 Br.

The CBE posted the lowest official buying rate in the market at 151.60 Br to the dollar, a figure that stayed unchanged for several days. Standing alone, this would put CBE at the bottom of the market table, but there is a nuance. The Bank offered a fixed bonus of 10 Br a dollar it buys, an off-the-books incentive that raises its actual purchase cost above its posted rate. Despite this, the CBE’s visible rate remained closer to the industrial average than the Central Bank’s own reference price.

The National Bank of Ethiopia’s (NBE) role deserves closer attention. On Saturday, January 17, the Central Bank posted the highest buying rate in the market (155.55 Br to the dollar), three cents shy of the top rate among commercial banks, quoted by Oromia Bank. This was not a one-off occurrence. For several weeks, Oromia Bank, which has long set the pace as the most aggressive dollar buyer, has effectively ceded its top spot to the Central Bank.

The Central Bank’s buying rate was 3.95 Br higher than the CBE’s headline offer, a notable spread by historical standards. This unveiled the Central Bank’s function as a market anchor, signalling direction more than participating in market pricing.

Oromia Bank continued to distinguish itself from other commercial banks during this period. Both its buying and selling rates were the highest in the market, making it the bank most openly signalling dollar scarcity. At the opposite end, CBE anchored the market’s lower boundary. Awash and Abyssinia clustered tightly around the industrial average, making minor daily adjustments but rarely straying far from one another or from Wegagen and Zemen, while Wegagen’s 152.09 Br was slightly below the mean.

While these differences might appear minor, their consistency revealed a deliberate strategy rather than random fluctuation. Awash, Abyssinia, Wegagen, and Zemen banks moved together as a bloc, their pricing patterns conditioned by shared expectations rather than market volatility.

Throughout the week, there were no abrupt shifts in bank pricing, no signs of defensive behaviour in spreads, and no last-minute surges in selling rates ahead of the weekend. There was also no evidence of a scramble for dollars at bank counters or panic-induced bidding. Instead, the Birr’s depreciation played out in measured, almost mechanical steps, each one seemingly sanctioned by the Central Bank’s slowly rising reference rate. Its quoted rate moved up last week, keeping buying and selling rates identical and posting a zero spread. This is not a tradable price but rather a policy signal, a directional cue for commercial banks on where the Central Bank expects rates to settle.

Cross-bank rate differences were extremely narrow. The dispersion in buying rates was generally within 1.5 Br, even between the highest and lowest offers. Higher quotes from banks such as Oromia, Zemen, and Tsehay toward the week’s end did not prompt rivals to follow suit. This stability reinforces the idea that cash pricing in foreign exchange remains harmonised through administrative means, rather than shaped by open market competition.

In typical forex markets, stress appears as volatility, with spreads widening and rates diverging as banks respond to changing conditions. The domestic market showed none of these features. The lack of defensive positioning before the weekends and the absence of abrupt repricing indicate that banks were not anticipating short-term shocks to their forex positions.

The implication is that the market is not free of stress, but that stress is being absorbed away from the counter, perhaps in the form of delays, rationing, or off-market transactions, rather than expressed through public quotations. Market watchers warn that such suppression of price signals may result in a sudden and sharp adjustment if or when these underlying pressures finally break through.

PUBLISHED ON Jan 17,2026 [ VOL 26 , NO 1342]