The Ethiopian Birr has shown signs of strengthening against the US Dollar as the National Bank of Ethiopia (NBE) continues its scheduled foreign exchange auctions. The latest auction, held on April 1, 2025, saw the weighted average exchange rate settle at Birr 131.71 per USD, reflecting a 2.88% appreciation from the Birr 135.62 per USD recorded in the previous auction in February 2025.

The strengthening of the Birr reflects Ethiopia’s improving foreign exchange position, supported by a series of macroeconomic reforms introduced in July 2024. The country has experienced increased foreign currency inflows from exports, remittances, and capital investments. “NBE’s foreign exchange reserves have surged by more than 200% following the transition to a market-driven forex system,” said Governor Mamo Mihretu in his recent statement.

Further supporting the country’s financial outlook, Ethiopia has reached an agreement in principle with its official creditors to restructure USD 8.4 billion in external debt. This restructuring move is expected to ease financial pressures and strengthen Ethiopia’s position in ongoing negotiations with private creditors, including bondholders. The anticipated reduction in debt servicing obligations could create additional fiscal space, further stabilizing the country’s economic environment.

NBE’s shift to bi-weekly foreign exchange auctions is playing a crucial role in stabilizing the market by ensuring a steady supply of forex to the private sector. The reduction in the exchange rate indicates a potential easing of forex pressures, a positive sign for businesses reliant on imports and foreign transactions.

The next auction is scheduled to take place in two weeks, with details to be announced one day prior.