ADDIS ABABA– The Ethiopian Economic Association (EEA) has announced that the gradual stabilization in the depreciation rate of Ethiopia’s currency, the Birr, indicates the potential to create market equilibrium.
Speaking at the Association’s 22nd International Conference, EEA President Prof. TassewWoldehanna said that a gradual stabilization in the Birr’s depreciation rate at 2.72 percent against the USD between January and March 2025, shows a notable slowdown from the 11.5 percent drop in the previous quarter.
This suggests the market is beginning to find its equilibrium. However, the journey toward full market efficiency is still underway. The spread in USD buying and selling rates across commercial banks has widened significantly, from a mere 2.37 ETB in December 2024 to over 7 Birr by March 2025, he remarked.
He further noted that the evolution of the official and parallel exchange rates is narrowing. While the gap between these rates reduced substantially from over 100 percent in July to 11 percent in December 2024, it partially widened again to about 19 percent by March 2025.
This recurring divergence highlights ongoing challenges in the foreign exchange market, including unmet demand for hard currency, administrative bottlenecks, and speculative activity, according to Tassew.
“We emphasize the importance of continuous efforts to enhance the depth and functioning of official FX market operations, including auction frequency and volume, to further narrow this divergence over time,” he said.
He further commended efforts to slow down the inflation rate.
The July 2025 Quarterly Macroeconomic Update of the Association noted that “inflation, which was more than 30 percent in 2023 and 2024, has slowed down, partly due to conservative monetary policy, and is close to 15 percent in 2025,” according to him. He, however, underlined the need to marginalize the inflation rate to a single digit.
Finance State Minister Eyob Tekalign (PhD) also emphasized that economic reforms are being implemented with long-term goals of market stabilization.
“Despite internal, regional and international inflammatory challenges, Ethiopia is building a resilient economy through reforms. The partnership with CSOs, think-tank groups, and international organizations is also supporting the reform implementation,” he noted.
BY YESUF ENDRIS
THE ETHIOPIAN HERALD SUNDAY EDITION 20, July 2025
