The Ethiopian birr closed the month at 135.04 per US dollar, posting a modest monthly depreciation of 1.1%, according to data from TradingEconomics. Now, 11 months in the market-based foreign exchange system, the currency continues to exhibit measured movements, albeit under tight oversight from the National Bank of Ethiopia (NBE).

Throughout June, the birr traded within a relatively contained band, peaking at 137.82 ETB/USD on June 18 before easing to its current level. The average rate for the month stood at 136.84, reflecting a shift toward more realistic price discovery compared to the previously rigid, overvalued regime.

Central to the current forex landscape is the National Bank’s bi-weekly foreign currency auction, which sets the official exchange rate based on bids from commercial banks. In June, auction clearing prices ranged from 133.17 to 134.95 birr per dollar, underscoring a controlled but steady depreciation.

But, access to foreign currency remains a persistent constraint for businesses, especially importers and manufacturers. The parallel market, though narrowed in spread, remains active, with rates reportedly reaching 158 ETB/USD, underscoring a still-fractured currency ecosystem.

Appearing before Parliament this week, NBE Governor Mamo Mihretu addressed the Standing Committee on Planning, Budget, and Finance Affairs as part of the central bank’s eleven-month performance review for the 2024/25 Ethiopian fiscal year. Mihretu acknowledged that the gap between the official and parallel exchange rates remains “stubbornly wide,” nearly a year after liberalization.

In a rare direct rebuke, the governor pointed to mismanagement within commercial banks as a major contributor to the persistent divergence. “Bad practices at financial institutions are distorting the market and undermining the reform’s intended impact,” he said, without naming specific banks.