Currency Pressures Keep the Ethiopian Birr as one of the weakest.

Addis Ababa — Ethiopia’s birr remains among the weakest-performing currencies globally in 2025, reflecting continued pressure from foreign exchange shortages, inflation dynamics, and cautious investor sentiment.

According to Bloomberg’s 2025 currency performance data, the Ethiopian birr ranked as the third-weakest currency in the world, behind the Argentine peso and the Turkish lira among currencies tracked globally. 

The birr has depreciated by more than 15 percent against the U.S. dollar this year, placing it among the poorest-performing currencies worldwide. Market analysts note that despite ongoing economic reforms, currency stability remains elusive.

Ethiopia is implementing a $3.4 billion International Monetary Fund (IMF) program, approved in July 2024, which includes measures to liberalize the foreign exchange market, open the financial sector to foreign investment, and advance privatization initiatives. In December, the IMF reached a staff-level agreement under the program’s fourth review, potentially unlocking additional funding pending approval by the Board.

Recent data indicate some macroeconomic improvements. Export earnings, supported by higher coffee revenues, have strengthened, while inflation eased to 10.9 percent in November, down from 18.6 percent in mid-2024. Government revenue performance has also improved.

Ongoing foreign currency shortages continue to put pressure on the birr. This persistent imbalance in the foreign exchange market is highlighted by the significant difference between the official exchange rate, which is near 155 birr to the dollar, and the parallel market rate, which hovers around 180 birr.

Economists say long-term stability and the alleviation of currency pressures will depend heavily on several critical factors: the sustained execution of reforms, improved foreign exchange inflows, and a stronger level of investor confidence.