US dollar black market exchange soaring in Ethiopia

1 min read

– Holiday season (04/18/2022) Dollar official exchange rate 52.26 birr. Black market exchange rate is 68.00 – 82.00 birr depending on location.
– Black market exchange is illegal in Ethiopia therefore its advisable to use legal channels to exchange foreign currency.

The Ethiopian currency is called Ethiopian Birr. It has been in service since the Nineteen-Thirties. The National Bank of Ethiopia and formerly the Bank of Abyssinia is the central bank.

The Ethiopian Birr is the second most used currency in Africa after Nigeria’s Naira. Although the first Birr dates back as far as the early nineties, the coins used in Ethiopia were Maria Theresa thalers and Menelik II talari. The second and current Birr has been the official currency of Ethiopia since the nineteen forties.

In May 2020, the International Monetary Fund (IMF) country report urged Ethiopia to accelerate the birr depreciation.

“Increasing the pace of depreciation would help reduce real overvaluation and act as a shock absorber during the crisis,” the report states.

The same report adds that authorities have underscored their continued commitment to closing the gap with the parallel rate to eventually move to a market-clearing exchange rate, but signalled a need to continue moving with caution.

In September 2019, National Bank of Ethiopia (NBE) Governor Yinager Dessie told Reuters that Ethiopia should slowly liberalise its exchange rate regime. However, the Ethiopian exchange rate system has not officially been liberalised yet and the rate is still determined by NBE.

“The National Bank of Ethiopia (Central Bank), follows a managed floating exchange rate regime where the local currency Birr is pegged to the US Dollar,” a study dubbed “The effect of exchange rate on economic growth in Ethiopia” partly reads.