Currency:- Dollar at 40 Birr and Euro at 48 Birr

The Birr has tumbled against the dollar and euro. Dollar is at 40 Birr and Euro is at 48 Birr despite the government’s measures to boost the export. The government’s move to narrow the gap between the so-called black market and the exchange rate between banks has been challenged with no major success as its reflected in the rates.

A year ago, January 2020, Ethiopian banks resell the US dollar, which they buy for 31 birr and about 85 cents, for 32 birr and about 50 cents. The Birr exchange rate weakened against the dollar during the year. The exchange rate of the dollar has risen by 8 Birr in a year.

Ethiopian banks have appreciated more than 40 birr since last Monday. The exchange rate has reached 40 birr and coins are increasing every day. The government’s move also sought to narrow the gap between the so-called black market and the exchange rate between banks, but failed.

This is not uncommon for financial management expert Abdulmanan Mohammed, who is closely monitoring the transaction. “One of the prerequisites for the Ethiopian government’s agreement with the International Monetary Fund (IMF) at the end of 2019 is a permanent solution to the foreign exchange deficit. One way is to weaken the purchasing power of Birr in the process. “We have to do this when we get money from them,” Abdulmanan told Deutsche Welle.

The International Monetary Fund (IMF) has agreed to provide $ 2.9 billion in loans to Ethiopia. Under the terms of the agreement, the long-term solution to the foreign exchange deficit and the establishment of a flexible foreign exchange trading system are among the conditions set out in the agreement signed by the government of Prime Minister Abiy.

Ethiopia has weakened the Birr against the dollar in the past. The biggest impact on the economy is the impact on inflation. In addition, the government has a foreign currency loan. It has to collect that tax in Ethiopian currency and pay it in foreign currency.

As the birr weakens, Ethiopia’s commodity prices will rise.