Addis Denies Coming Currency Devaluation
Speculation that the birr currency would be devalued is “completely unfounded”, Ethiopia’s junior finance minister says as the country seeks an International Monetary Fund (IMF) loan after agreeing to a ceasefire in its two-year civil war.
The birr currently trades at 53.42 to the United States dollar, according to Refinitiv Eikon data, but it is reportedly worth 96 to 97 on the black market, and the country has long experienced foreign exchange shortages.
Ethiopia operates a managed exchange rate for the birr, allowing it to depreciate gradually against the dollar. In 2020, the IMF recommended moving to a market-determined exchange rate to deal with an overvalued currency and foreign exchange shortages.
Africa’s second most populous country requested debt restructuring in early 2021, but progress was held up by a two-year civil war in its Tigray region.Ethiopia’s government and the Tigray People’s Liberation Front, a rebel force-turned-political party, agreed on November 2nd to stop fighting as the war displaced more than two million people and hurt the economy.
