The Ethiopian birr depreciated modestly in early January, with official mid-rates rising by 0.32 birr over six days. Commercial banks set buying rates between 152.55 and 152.85 birr per dollar, though outliers like Zemen Bank reached 153.23 birr, hinting at varied strategies. The parallel market rate hit 188 birr per dollar, widening the gap with official figures.
In the first week of January, from Friday to Saturday, the Ethiopian birr eased lower in small increments, with commercial banks' buying rates ranging from 152.55 to 152.85 birr per dollar. The National Bank of Ethiopia exerted control by anchoring official rates, fostering a managed decline. Zemen Bank stood out on January 10 with a buying rate of 153.23 birr, diverging from peers like Dashen at 151.26 birr, Awash at 152.21 birr, Abyssinia at 152.26 birr, and Wegagen at 152.06 birr.
Average buying rates rose from the low 152s to just under 153 birr by the week's end, while selling rates hovered near 156 birr. This gradual shift lifted the official mid-rate by 0.32 birr over six days, equating to about 0.06 birr daily and implying an annualized depreciation of 14 to 15 percent—enough to address external pressures without sparking inflation.
The central bank's buying quote reached 155.54 birr, outpacing commercial banks, while the Commercial Bank of Ethiopia (CBE) held at 151.60 birr, a notable increase from prior months but still below others. Bonuses offered by banks like CBE boosted effective buying rates to 162 birr, rendering public quotes less indicative of actual deals and creating layers of pricing.
The parallel market rate climbed to 188 birr per dollar by January 10, establishing a 34-birr premium over the official mid-rate of around 154 birr. This disparity underscores incentives for bonuses, delays in export surrenders, and importers' reliance on informal channels. Policymakers, under Governor Eyob Tekalegn (PhD), are opting for controlled depreciation to buy time for debt negotiations and reforms, though experts caution that sustained gaps could erode formal market stability.
