Bank Intervenes To Shore Up Local Currency
Mar. 4, 1997
Ghion Hagos PANA Staff Correspondent
ADDIS ABABA, Ethiopia (PANA) - The Ethiopian central bank almost doubled
the amount of hard currency put up for sale
at the weekly currency auction in Addis Ababa last week, to halt the
depreciation of the birr.
In addition, the bank said it would with effect from this month (March)
release 5,000 dollars on justifiable request, to importers
and other business concerns by-passing the foreign exchange allocation
regime.
Both measures were in response to the demand of the business community.
The increase of the amount of money available at the auction from 17
million dollars to 30 million dollars, resulted in the
appreciation of the birr by 10 cents over the weekend.
At the end of the auction on Saturday, one dollar was worth 6.63 birr
compared to 6.73 birr the previous weekend.
Banking sources said the measures taken by the central bank would result
in lower bids for hard currency at the auction, thus
shoring up the birr in relation to the dollar.
On the other hand, this may be unlikely as importers, who previously
sourced their foreign currency requirements through the
so-called Franc o Valuta arrangements, may bid for more dollars, further
pushing down the birr, analysts said.
The government banned the Franc o Valuta arrangements in July on imports
financed with foreign exchange obtained through
unofficial private transfer and from the local black market.
The dollar, which fetched 7.50 birr on the black market in July, is
presently worth 7.05 birr. The July official rate was 6.25 birr
to one dollar.
The birr stood at 2.07 to one dollar for almost three decades, before it
was devalued by about 141 percent in October 1993.
It was fixed at 5.00 birr to the dollar under the structural adjustment
programme the government negotiated with the
International Monetary Fund.
The currency auction was introduced by the central bank in May 1994, on
a fortnightly basis. It became a weekly exercise in
August.
** To UNSUBSCRIBE from dehai, send mail to: majordomo@primenet.com **
** with the following text in the body of your mail: **
** unsubscribe dehai your-email-address **