Overview of Ethiopia's Forex Auction and Inflation Trends

Following a September circular by Vice Governor Eyob Tekalegn (PhD) banning upfront interest payments, commercial banks have adjusted their deposit competition strategies. Recent forex auctions have shown mixed results, with an undersubscribed September round followed by a successful October 13 auction. Currently, commercial banks are quoting the dollar at varying rates, averaging 3.13% higher than the auction average, though the rate has held steady near 160 Birr per dollar since August. According to IMF data, Ethiopia’s gross reserves stand at 5.6 billion dollars. While annual inflation eased to 14.9% in September, monthly inflation rose to 1.8%. Furthermore, a survey by the Ethiopian Economics Association reveals that 60.9% of economists doubt the government's target of achieving single-digit inflation.