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NBE Dismisses Rumors of Birr Devaluation

ADDIS ABABA– The National Bank of Ethiopia (NBE) has dismissed speculations that the Ethiopian currency Birr would be devalued.

There has been neither discussions nor decision made to devalue Birr, Governor Mamo Mihretu told local broadcaster FBC, citing “extraneous speculations” on the issue.

According to the Governor, some traders are hoarding basic commodities and increasing their prices based on these “unfounded rumors”.

“What they are doing is wrong and has to be corrected,” he said said.

“We advised the public to follow the bank’s official statements only and not be distracted by baseless rumors.”

The NBE operates a managed exchange rate for the birr, allowing it to depreciate gradually against the dollar when needed.

Governor Mamo said the central bank will continue to take sensible macro reform but not a mere devaluation.

In banks, the birr is currently being traded at 54.19 to the US dollar, but the exchange rate is much higher on the black market.

Authorities are currently preparing the second phase of the Homegrown Economic Reform Agenda (HGER II).

Under this program, he said the NBE will continue to take actions to create stable and market-oriented forex, monetary and financial systems.

These steps include reducing the amount of currency circulating in the market by bringing borrowing by the government down reaching up to zero in the long term.

These measures will also target the loan mobilization of the finance sector that involves 30 commercial banks including 2 state-owned ones.

In the past nine months of the current Ethiopian fiscal year, the total loans the financial sector disbursed reached 434 billion Birr, up by 69.7%, as per the NBE.

The amount disbursed by private banks alone showed a 139% increase, Mamo said. These figures show loan disbursement “is accelerating too quickly,” he added.

To reduce this and that of the currency circulating in the market, the central bank will implement a monetary policy, the governor emphasized.