NBE Doubles Down on FX Intervention With $500 Million Special Auction

The National Bank of Ethiopia (NBE) is preparing to inject another $500 million into the foreign exchange market through a special auction on August 20, intensifying its intervention just days after demand for dollars nearly quadrupled the amount offered in its latest regular auction.

The special auction, announced by the central bank on August 19, will be conducted for monetary policy purposes, with commercial banks submitting bids through the CSD-Based FX Auction System.

Bidding is scheduled from 10:00 a.m. to noon, with results expected at 3:00 p.m. and settlement on the same day.

A Large Injection After Demand Surges

The timing of the intervention is significant.

At the NBE’s August 12 regular FX auction, banks submitted $470.17 million in bids against only $125 million available. That means demand was approximately 3.8 times the amount supplied. Only nine of the 28 participating banks received allocations.

The auction also produced a weighted average exchange rate of 161.80 birr per US dollar, compared with 157 birr at the June 24 auction—an increase of about 3.1 percent in less than two months.

The latest special auction therefore comes at a time when the gap between foreign-currency demand and available supply remains substantial.

$625 Million Could Be Offered in August

The $500 million special auction is separate from the NBE’s regular first-quarter programme.

The central bank had already scheduled four bi-weekly auctions of $125 million each for August 12, August 26, September 9 and September 23, bringing the regular first-quarter allocation to $500 million.

With the August 12 auction already completed and the additional $500 million special auction now scheduled, the NBE could make as much as $625 million available through FX auctions during August alone.

That would represent a substantial escalation compared with the final quarter of the 2025/26 fiscal year, when the central bank allocated a combined $200 million through two regular auctions.

What the Intervention Signals

The move highlights the challenge facing Ethiopia’s increasingly market-based foreign exchange system.

The NBE has been shifting toward market-determined exchange rates while using FX auctions to provide liquidity and manage disorderly market conditions. The latest auction data suggest that demand for foreign currency remains considerably higher than the supply available through regular auctions.

The IMF has also noted that foreign exchange shortages and limited interbank FX trading remain important features of Ethiopia’s evolving foreign exchange market.

The special auction could therefore provide banks with significantly more access to foreign currency in the short term. But its broader impact will depend on how much demand is ultimately satisfied and at what exchange rate.

For businesses reliant on imported inputs, the additional supply could temporarily ease access to dollars. For the birr, however, the auction will provide another market signal as banks compete for foreign currency following the recent depreciation.

The central bank’s decision to deploy a $500 million intervention so soon after the $125 million regular auction underscores the scale of foreign-exchange demand confronting Ethiopia as it enters the second month of the 2026/27 fiscal year.