Central bank announces a Special Foreign Exchange Auction for February 25
Addis Ababa, February 24, 2025 (FMC) – The National Bank of Ethiopia (NBE) today announced that it will be conducting a Special Foreign Exchange Auction on February 25, 2025. The auction will be in the amount of $60 million and is open for participation by all banks, the central bank’s official notice indicated.
“Following the comprehensive macroeconomic reform program launched in July 2024, Ethiopia’s balance of payments position has been showing steady and significant improvement, thanks to rising exports, remittances, and capital inflows. In recent months, in particular, the delivery of record high gold supplies to the NBE (which is the sole authorized gold exporter in the country) has boosted the central bank’s gold stocks and increased the level of foreign exchange reserves above NBE’s initial expectations,” NBE asserted.
While higher-than-expected foreign exchange inflows are a welcome and positive outcome of the reform, it is important that they do not undermine the central bank’s targets for monetary growth and inflation, it was mentioned.
Accordingly, in order to help offset what could potentially become excessive monetary growth and considering also the central bank’s higher-than-expected foreign exchange position, the NBE has decided to conduct a sale of foreign exchange funds to the banking system, the central bank said.
This operation will ensure that the current prudent monetary stance is maintained and improve FX market liquidity by providing the private sector with some portion of the higher-than-expected foreign exchange accumulation currently taking place at the central bank.
The NBE will closely monitor market developments over the coming weeks and may, if warranted, conduct additional foreign exchange sales as part of meeting its price and external stability objectives.
In that regard, the central bank invited interested banks to submit their bids in the time frame and manner specified in a post on its social media page.