Ethiopia’s foreign exchange market interventions reached $640 million in the first four weeks of 2026 as export receipts and external inflows strengthened the country’s reserve position.
The figure includes a record $500 million special dollar auction completed on Tuesday by the National Bank of Ethiopia (NBE), marking the largest single foreign currency sale since the programme began.
Combined, January’s disbursements account for 82% of the $780 million sold throughout 2025, highlighting a significant jump in the scale of market operations.
The move comes as Ethiopia’s export earnings climbed above $5 billion in the first half of the 2025/2026 fiscal year, exceeding the government’s target by 20% and giving authorities more room to address chronic dollar shortages.
Rising reserves have underpinned the intervention drive, as policymakers intensify efforts to stabilise the birr, improve market liquidity and support economic reforms.
So far, the NBE has completed three FX auctions in January, according to public notices reviewed by Finance in Africa.
15 auctions, excluding special rounds, have been concluded since the initiative was launched in August 2025.
The programme forms part of a broader strategy to liberalise the banking system, manage monetary growth and move towards a more market-driven exchange rate regime.
Central bank data show that banks’ average daily FX sales to businesses and importers rose sharply to $25 million in July 2025, from just $1 million a year earlier, reflecting improved supply conditions.
Largest sale since liberalisation
Tuesday’s auction stands out for both size and demand.
The NBE sold $500 million, completing the first special FX operation of 2026 and the largest single transaction since currency reforms began in 2024.
According to the central bank, 31 lenders bid for $592 million at a weighted average exchange rate of ETB154.8 per dollar, but only 25 banks received allocations, underlining the depth of unmet demand in the system.
Before this week, the highest disbursement occurred in August and October 2025, when the NBE sold $150 million in each round.
The latest injections come as the International Monetary Fund (IMf) concludes its fourth review of Ethiopia’s reform programme, which is expected to unlock an additional $261 million in external financing.
If approved, total IMF disbursements under the facility will reach $2.8 billion, further boosting central bank reserves.
Authorities say the review reflects stronger macroeconomic performance, an improved fiscal position and progress in restoring debt sustainability, driven by sustained reform momentum.
“Progress in foreign exchange market reform, including the shift to transparent FX auctions and steps toward a market-based system, has restored confidence, improved export competitiveness, and supported private sector activity,” the NBE noted in a recent statement.
Export boom reshapes FX position
The growing scale of FX interventions underscores larger-than-expected reserves bolstered by a gold-powered export boom.
Trade ministry data show the country generated $5.1 billion in exports in the first six months of the current fiscal year, surpassing the prorated target of $4.42 billion.
This represents 120% of the revenue goal and an increase of $1.8 billion compared with the same period a year earlier.
Gold, which accounts for over 21% of Ethiopia’s exports, recorded steady price gains in 2025, climbing as much as 55% and surpassing $4,000/ per ounce for the first time in October amid rising global trade risks and geopolitical tensions.
In the fiscal year ended July 2025, gold exports reached $3.5 billion, overtaking coffee — traditionally Ethiopia’s largest source of foreign exchange — which generated $2.65 billion, according to official figures.
With global prices now pushing beyond $5,000 an ounce, Ethiopia is on track to meet its $9.4 billion export target for the full fiscal year.
However, analysts caution that sustaining momentum will depend on continued reforms, better logistics, wider market access and improvements in export infrastructure.
Birr stabilises after modest decline
Ethiopia’s currency has shown early signs of stabilisation following last year’s sharp depreciation.
The birr has traded at a relatively steady ETB154.8 per dollar at every auction held so far in 2026, supported by increased dollar supply.
This follows an 8.1% slide in the first quarter of the fiscal year that began on July 7, 2025, which analysts attributed to adjustment pressures under the new FX regime.
As part of sweeping reforms aimed at attracting foreign investment, the NBE floated the birr in 2024, allowing market forces to set exchange rates. The shift triggered a steep depreciation, with the currency losing nearly two-thirds of its value, according to Bloomberg estimates.
The recent stabilisation suggests that market pressures are beginning to ease, helping to contain inflation and restore some confidence.
Headline inflation in East Africa’s second-largest economy returned to single digits in December 2025, slowing to 9.7%from 17.1% the previous month and 15.5% in January 2025.
The moderation reflects tight monetary conditions and reforms backed by a $3.4 billion IMF credit facility.
Still, dangers remain.
Market watchers warn that the widening exchange-rate spread across domestic banks could undermine confidence, increase volatility and reverse recent gains if liquidity conditions deteriorate.
