The National Bank of Ethiopia's foreign-exchange auction system has completed 25 rounds since its launch in August 2024, according to Capital Ethiopia, offering a two-year scorecard of a mechanism designed to bring order to the country's dollar market but that has struggled to close a persistent gap between demand and supply.
The NBE introduced the auction shortly after floating the birr on 29 July 2024, a reform that accompanied Ethiopia's entry into an International Monetary Fund Extended Credit Facility. Five reviews of the programme have been completed, with $2.65 billion of the $3.4 billion facility disbursed. The first auction cleared on 7 August 2024 at 107.9 birr per dollar. Since then the official rate has moved from 57 to more than 158 birr per dollar — a depreciation of nearly two-thirds that has unfolded even as the central bank tried to steady the market with periodic dollar injections.
The pattern across those rounds has been consistent: sizable NBE interventions provide temporary relief before the birr resumes its slide. A record $150 million auction on 5 August 2025 briefly steadied the market, yet the currency kept weakening. In the first quarter of fiscal year 2025/26, the birr fell 8.1 percent, sliding from 135.5 to 146.4 birr per dollar between July and September 2025, according to the Ethiopian Economic Association.
The central bank's latest move — a special $500 million forex auction scheduled for 20 August 2026 — signals that the NBE recognises the scale of unmet demand. Economists say strong underlying demand for hard currency, driven by the need to import fertiliser, medicines, and capital goods, continues to outstrip the limited supply the central bank can channel through the auction window.
The adequacy of the auction mechanism itself has drawn scrutiny. Getachew, an economist and public policy expert, raised concerns about whether the system is achieving its stated aims.
> "The first auction after floating the birr was necessary to show stability, but this one raised serious questions."
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Critics have also questioned how evenly the dollars are distributed. Wassihun pointed to disparities in which banks received forex allocations, claiming that although the NBE stated 27 banks received forex, only a handful of institutions with the largest balance sheets captured the bulk of the supply.
The IMF itself has acknowledged the limits of the reform. In mid-2025, the Fund warned that Ethiopia's effort to unify its exchange market was showing results but faced stubborn structural hurdles that could keep the parallel-market premium alive in the medium term. No subsequent Fund assessment has publicly revised that view, and more than a year later, the auction count — whether 25 rounds as Capital Ethiopia reports or 24 as tallied separately — matters less than the structural reality each round reveals.
The scale of the float's broader economic consequences has become clearer over time. A European Union assessment documented a roughly $50 billion contraction in Ethiopia's nominal GDP measured in dollar terms following the currency shift — a figure that captures the dramatic repricing of the economy even as output in birr terms continued to grow. That contraction underscores the execution risk embedded in the reform: the auction system was designed to channel dollars more efficiently, but the economy's purchasing power in international markets has shrunk sharply.
The FX auction was conceived as the centrepiece of Ethiopia's shift from a fixed to a market-determined exchange rate. Two years on, the mechanism has become a regular feature of the monetary landscape. Yet as the IMF warned in mid-2025, structural hurdles — including the persistent gap between dollar demand and the supply the central bank can mobilise — continue to test whether the reform is building durable market infrastructure or merely buying time. The recently announced $500 million auction will offer the next data point.
Sources: Capital Ethiopia, Addis Insight.
