Ethiopian Government Devalues Birr Around 30%

Ethiopian Government, on Monday, officially devalued its currency birr. Commercial Bank of Ethiopia has published new exchange rates.

Ethiopian birr has been devalued around 30%. The new birr-US dollar exchange rate uploaded by the Commercial Bank of Ethiopia shows buying price 74.7364 birr for one dollar (previous 54.5) and selling price 76.2311 birr for one dollar (previous 58.8). Overall, the birr has lost around 30% of its value.

The devaluation came as part of new macro economic reforms announced by the Ethiopian Prime Minister Abiy Ahmed last night. The new macro economic reforms are being implemented to get a financial bailout package from the International Monetary Fund. The IMF is set to announce a financing agreement with the Ethiopian government in coming hours. It has been asking the Ethiopian government to link the FX rate to open market.

This is the first time in decades that Ethiopian government has decided to liberalize the foreign exchange market.

Before this new change in birr exchange rate, birr was selling in black market around 120 birr per dollar. It would be interesting to see how the new official exchange rates affect value of birr in black market. The sudden currency devaluation could push panicked people to buy more dollar from the black market.

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