National Bank of Ethiopia Announces Bi-Weekly Auctions, Cracks Down on Hawala Operators

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Ethiopia’s central bank governor, Mamo Mihretu, declared on Monday that the country’s longstanding foreign exchange shortage is now under control.

Speaking after a high-level meeting with commercial bank executives, Mihretu revealed that Ethiopia’s foreign exchange reserves have surged by 200% since the birr was floated in July 2024. The increase has allowed the nation to meet its fiscal targets three months ahead of schedule.

To further stabilize the market, the National Bank of Ethiopia (NBE) will implement bi-weekly foreign exchange auctions starting April 1, initially offering 50 million US dollars.

The decision to hold bi-weekly auctions follows discussions on March 31, 2025, between NBE regulators and commercial bank executives. During the meeting, directives were issued to strengthen foreign exchange management and enhance regulatory enforcement.

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Mihretu also issued a directive to banks to maintain reasonable foreign exchange fees, acknowledging growing private-sector concerns about accessibility. He attributed the improvement to the floating of the birr, which saw the currency’s value drop from 57.48 to 120 per US dollar.

Mihretu further emphasized the need to address confusion among the public, banks, and businesses regarding foreign exchange management.

Strengthening Forex Management

Mihretu stated that exchange rate reforms have significantly improved foreign currency inflows, strengthening the central bank’s reserves.

However, he acknowledged ongoing challenges in forex management, impacting businesses, banks, and the public, and emphasized the need for timely corrective measures.

Addressing Market Gaps

Previous forex auctions have provided insights into market dynamics. In September 2024, the NBE sold 60 million US dollars at an average rate of 135.62 birr per dollar, with bids ranging from 130 to 141 birr. A subsequent auction in November saw 75 million US dollars sold at 138.45 birr per dollar.

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However, demand still outstripped supply, with some banks securing as little as 200,000 US dollars. By shifting to a bi-weekly auction schedule, the NBE aims to alleviate such pressures and ensure better access to foreign exchange.

Crackdown on Hawala Networks

Mihretu also announced a tougher stance against illegal hawala operators, warning of strict measures, including full suspensions for those involved in capital flight or illicit transactions.

Jefferson Wachira is a writer at Africa Digest News, specializing in banking and finance trends, and their impact on African economies.