Addis Ababa: The National Bank of Ethiopia (NBE) has announced a Special Foreign Exchange Auction scheduled for February 25, 2025. The auction will involve 60 million USD and is open to participation by all banks.
According to Ethiopian News Agency, following the macroeconomic reform program initiated in July 2024, Ethiopia’s balance of payments position has improved significantly, driven by rising exports, remittances, and capital inflows. The recent delivery of record high gold supplies to the NBE, which is the sole authorized gold exporter, has further increased the central bank’s gold stocks and foreign exchange reserves beyond initial expectations.
The NBE highlighted that while the higher-than-expected foreign exchange inflows are a positive outcome of the reforms, it is crucial that they do not disrupt the central bank’s targets for monetary growth and inflation. To counter potential excessive monetary growth and to manage the elevated foreign exchange position, the NBE has decided to sell foreign exchange funds to the banking system.
This action aims to maintain the current monetary stance and improve FX market liquidity by distributing some of the increased foreign exchange reserves to the private sector. The NBE will continue to monitor market developments and may conduct additional foreign exchange sales if necessary to achieve its price and external stability objectives.