NBE’s $500 Million Special FX Auction Undersubscribed as Demand Falls Short
The National Bank of Ethiopia (NBE) has released the results of its Special Foreign Exchange Auction conducted on 21 February 2026 in Addis Ababa, revealing that the auction was undersubscribed despite full participation from the banking sector.
NBE offered USD 500 million, while total bids reached USD 455.29 million, leaving the auction undersubscribed by USD 44.71 million. All 30 participating banks were successful, meaning each institution received the full amount it requested.
The auction results show a marginal (cut-off) rate of 152.0079 Birr per USD. This rate also represented the lowest bid received. Conversely, the highest bid rate reached 154.0000 Birr per USD. Overall, the weighted average rate for all successful bids was calculated at 153.2503 Birr per USD.
What factors could lead to the auction being undersubscribed?
An undersubscribed auction occurs when demand from banks falls short of the amount of foreign exchange supplied. In this case, banks collectively requested USD 44.71 million less than what was offered. One possible explanation is improved short-term FX liquidity within the banking system. If banks hold relatively stronger foreign-currency positions or if immediate corporate demand is moderate, institutions may have seen limited need to bid aggressively.
Another factor may relate to pricing expectations and balance sheet strategy. With bid rates ranging up to 154.0000 Birr/USD while the cut-off settled at 152.0079 Birr/USD, some banks may be adjusting demand based on anticipated exchange rate movements or broader monetary policy signals. Given the size of the USD 500 million offer, the auction may have exceeded immediate absorption capacity, particularly if banks are managing exposure cautiously amid evolving market conditions.
The NBE confirmed that the next foreign exchange auction will proceed in line with the previously announced schedule, maintaining its structured approach to FX market operations. Market participants will be watching upcoming auctions to determine whether this outcome signals a temporary adjustment or a broader shift in foreign exchange demand dynamics.