The National Bank of Ethiopia (NBE) will continue to hold foreign currency auctions as needed, Governor Mamo Mihretu announced today. This decision comes as the central bank reports a significant increase in its foreign exchange reserves, which have tripled over the past fiscal year.
Governor Mamo stated that this encouraging trend of robust foreign currency inflows and acquisitions has exceeded expectations and is set to continue into the new fiscal year. The NBE’s strategy is to provide a portion of these earnings to banks through auctions, which is expected to boost foreign currency supply and help stabilize prices and the overall market.
In the latest auction, 28 banks participated, and $150 million was sold. According to the governor, all participating banks secured the foreign currency they requested at an average rate of 138 birr per US dollar. Banks that won the auction are expected to combine these funds with their own reserves to provide sufficient foreign currency to their customers starting next week.
In his briefing, Governor Mamo urged the business community to use the formal banking system for their foreign currency needs and to avoid the informal market. He warned that those involved in illegal currency exchange could face serious penalties, including the confiscation of funds. Addressing a common complaint, the governor noted that banks are no longer requiring excessive local currency deposits beyond the letter of credit (LC) value when approving foreign currency. He encouraged businesses to report any illegal banking practices to the NBE.
He also highlighted that the foreign currency reform program in Ethiopia is being successfully implemented. The central bank plans to strengthen its crackdown on illegal money transfer agents based abroad who are working to undermine the country’s financial system and distort market prices.
Governor Mamo assured the public that all banks are now able to provide an estimated $500 million in foreign currency to the business community each month, and this amount is growing. He also added that travelers seeking small amounts of foreign currency can easily obtain it from foreign exchange bureaus and the Commercial Bank of Ethiopia.
