The National Bank of Ethiopia (NBE) has announced a devaluation of the country’s currency, the birr by 15% to control inflationary pressure and to boost export earnings which had hitherto stagnated. The devaluation will be effective from Wednesday, October 11, 2017.
“Since investment return is high in Ethiopia, the devaluation won’t cause an inflationary pressure and adversely affect import,” Yohannes Ayalew, NBE vice governor, and chief economist said at a press conference in Addis Ababa.
Addis Ababa earned $2.9 billion in the 2017-2018 fiscal year, versus a target of $4 billion. The central bank said it raised the main interest rate to 7 percent from 5 percent to stimulate savings as well as to counter inflation.
“The rate was pushed to mitigate the inflationary pressure that could arise from the devaluation,” Yohannes said.
The devaluation pegs the Birr at 26.91 to the dollar, up from 23.40 Br on the official market.