Tsehay Bank rattled the foreign exchange market last week by offering a buying rate of over 125 Br to the U.S. Dollar, an unusual move attributed by industry observers to its executives' heightened scramble for hard currency. The Bank's rate posted on December 27, 2024, was 125.96 Br for buying, well above the market average.

However, ZamZam Bank flirted with the 125 Br threshold yet held a few cents below it for several consecutive days. That caution could reveal the diverging tactics employed by smaller private lenders, many of which lack either the liquidity or appetite to vie aggressively in the tight market. The gap between Tsehay’s tactics and ZamZam’s shying illustrated a financial sector increasingly fractured by each bank’s cost-benefit calculations.

Amid these divergences, the big four private banks — Awash, Dashen, Abyssinia, and Wegagen — appeared to have inching their daily postings closely with the state-owned Commercial Bank of Ethiopia (CBE). The CBE’s buying rate, firmly at 123.59 Br last week, remained the lowest in the forex market and, in effect, served as a steady hand. Its selling rate, at 126.071 Br, offered a further signal of relative calm. CBE’s near-static postings have historically exerted an outsized influence on the forex marker. Last week was no exception.

The Brewed Buck, however, has shown no sign of reversing its persistent slide against the Green Buck. From December 23 to 28, 2024, it weakened steadily. The National Bank of Ethiopia (NBE), which tracks a weighted average across the banking industry, broke the 125 Br-to-a-Dollar mark in its reference rates, delivering what many analysts see as confirmation that depreciation pressures continue to mount. The Central Bank's acknowledgement of this psychological threshold offers little comfort to market participants wary of intensifying foreign currency shortages.

Last week, the average buying rate across all banks was 124.57 Br, while the average selling rate reached 127.05 Br, implying a spread of roughly two percent. Industry insiders say this margin is typical for most market players.

What stood out more starkly was Tsehay’s aggressive pricing, which soared highest on December 27 with a 128.48 Br selling rate, an attempt, industry observers suggest, to attract the dwindling supply of dollars held by exporters, diaspora, and other dollar-earning clients. That position placed it well ahead of peers whose forex managers prefer a more measured climb, despite internal pressures to shore up forex buffers.