Ethiopia’s Currency Auction Went From 28 Bidders to Five in Two Weeks
ETHIOPIA · MARKETS
Key Facts
—The collapse: Auction No. 27 on 26 August drew five participating banks, against 28 at Auction No. 25 on 12 August. Only two of the five were successful.
—The bids: Total bids fell from US$470.17 million on 12 August to US$170.51 million on 26 August. Both auctions offered a US$125 million allotment.
—The rate: The marginal and weighted average rates settled at 160.2070 birr per dollar on 26 August, slightly below the 161.0050 marginal rate on 12 August. The price moved very little despite the drop in demand.
—The special auction in between: On 20 August the National Bank held a special auction injecting US$500 million, drawing 22 participating banks of which 21 were successful. Total bids reached US$710.14 million at a weighted average rate of 160.2144 birr per dollar.
—What it may indicate: A large special auction can satisfy pent-up demand and leave the next scheduled sale thin. That is the benign reading, and it is not the only one.
—The context: Ethiopia floated the birr in 2024 under an IMF-backed programme, and the currency has weakened substantially since. The auctions are the central bank’s main tool for managing that transition.
Ethiopia’s foreign exchange (forex) auction, which drew 28 banks on 12 August, attracted just five on 26 August, with total bids falling from US$470.17 million to US$170.51 million. The marginal rate barely moved, settling at 160.2070 birr to the dollar.
What the Ethiopia forex auction numbers show
The sequence is short and stark. On 12 August, Auction No. 25 drew 28 participating banks bidding for a US$125 million allotment, with total bids of US$470.17 million and a marginal cut-off of 161.0050 birr per dollar.
Nine banks secured funds at that sale. Demand ran to nearly four times the amount on offer.
On 26 August, Auction No. 27 offered the same US$125 million and drew five banks. Total bids came to US$170.51 million and only two participants were successful.
The marginal and weighted average rates settled at 160.2070 birr per dollar, marginally stronger than the earlier cut-off. Demand collapsed while the price stayed put.
The US$500 million auction in the middle
Between those two sales sat a special auction on 20 August that injected US$500 million into the system in a single day. It drew 22 participating banks, of which 21 were successful.
Total bids at that sale reached US$710.14 million at a weighted average rate of 160.2144 birr per dollar. It was, by some distance, the largest single intervention of the month.
This is the most plausible explanation for what followed. A bank that filled its dollar requirement on 20 August has no reason to bid six days later.
On that reading, the 26 August result is a hangover rather than a warning. The test is whether participation recovers at the next scheduled auction.
The reading that is less comfortable
The alternative interpretation is that banks are stepping back because the auction price no longer reflects where dollars actually change hands. When an official rate drifts from a parallel one, official windows go quiet.
The rate data is ambiguous on this point. A marginal rate that barely moves while bidding falls by two thirds is unusual, because thin demand normally pushes the clearing price in one direction or the other.
It is worth being careful here. Neither the National Bank nor the participating banks have explained the drop, and no parallel-market spread has been published alongside these results.
What can be said is that the figures come from the auction results themselves. The interpretation of them does not.
One further caveat belongs on the page. These results are reported through Ethiopian financial media rather than a single consolidated central-bank release, and auction numbering across outlets is not always consistent.
Why this matters beyond Addis Ababa
Ethiopia is running one of the most consequential currency liberalisations on the continent. The birr was floated in 2024 under an IMF-backed programme, and the exchange rate has been the visible cost of that decision.
The auctions are how the central bank meters dollars into the system while that adjustment happens. Their health is a direct read on whether the float is functioning as a market or as a queue.
Latin American readers have a long memory for this exact moment. Argentina’s successive attempts to unify its exchange rate hinged on whether official windows kept attracting genuine demand, and the answer was usually visible in participation before it was visible in the rate.
There is a real economy behind these numbers, and it is where the stakes sit. Importers, fuel distributors and manufacturers depend on the auction window for the dollars that keep supply chains moving.
When participation thins, the shortage does not disappear; it moves somewhere less visible and usually more expensive. That is the transmission channel worth watching over the coming weeks.
None of this is investment advice, and rates and volumes change with every auction. The next scheduled sale will say considerably more than this one did.
Frequently asked questions
How far did participation in Ethiopia’s forex auction fall?
Participation dropped from 28 banks at the 12 August auction to five at the 26 August auction. Only two of the five were successful.
How much was bid?
Total bids fell from US$470.17 million on 12 August to US$170.51 million on 26 August. Both auctions offered a US$125 million allotment.
What happened to the exchange rate?
The marginal and weighted average rates settled at 160.2070 birr per dollar on 26 August, slightly stronger than the 161.0050 marginal rate on 12 August. The rate moved very little despite the fall in demand.
Was there another auction in between?
Yes. A special auction on 20 August injected US$500 million, drawing 22 banks with total bids of US$710.14 million at a weighted average rate of 160.2144 birr per dollar.
Why did participation fall?
No official explanation has been published. A large special auction six days earlier may have satisfied demand, but a widening gap with parallel-market pricing is an alternative reading that has not been ruled out.
Sources: National Bank of Ethiopia auction results, reported by Capital (Addis Ababa) and StockMarket.et; Reuters; Birr Metrics.
Connected Coverage
Ethiopia’s currency adjustment was covered when the birr hit a record low on a US$500 million sale, and East African bank earnings run through I&M Group’s half-year results. Frontier currency risk across the continent is mapped in Africa: The New Scramble, with more on our Eastern Africa hub.
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