Ethiopian Informer
ADDIS ABABA (EI): The Ethiopian birr was devalued by approximately 30 percent on Monday as the country’s central bank rolled out a market-based foreign exchange regime.
At the end of last week, the birr was trading at 57.48 to 1 U.S. dollar, but by Monday morning, it had dropped to 74.73 birr per dollar.
This decision came just a day after Ethiopia announced the launch of a comprehensive macroeconomic reform policy.
In a statement released on Sunday, Prime Minister Abiy Ahmed highlighted that a key aspect of the macroeconomic reforms is the introduction of a market-based foreign exchange rate regime, which aims to alleviate foreign exchange shortages, encourage private sector investment and growth, and align import and export prices with market realities.
“The market-based foreign exchange rate regime is essential for addressing foreign exchange shortages, removing barriers to private sector growth, and ensuring that the prices of goods and services reflect market conditions,” Ahmed stated.
On Monday, the National Bank of Ethiopia (NBE) announced significant changes to the country’s foreign exchange system, effective immediately.
NBE Governor Mamo Mihretu explained that the reform allows for a competitive and market-driven determination of exchange rates, addressing long-standing distortions within the Ethiopian economy.
Under the new regime, banks will have the freedom to buy and sell foreign currencies with their clients and among themselves at mutually agreed rates, with the NBE intervening only minimally to support the market during its initial stages or in cases of significant market instability.
(FILE PHOTO shows Ethiopian birr currency notes)
