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Ahmaric News

Ethiopia Devaluates Currency by 15%

ethiopian National BankEthiopia has devaluated its exchange rate of Birr by 15 percent against international currencies, the National Bank of Ethiopia announced. Addis Ababa October 10/2017

Deputy CEO of NBE Yohannes Ayalew said the devaluation is important in enhancing performance of the country’s export sector.

The move is said to promote the country’s export sector that has been performing low over the past years.

For the past five years, the fluctuation of commodity price in international market and strength of USD relatively against other foreign exchanges, lead to the decline of Ethiopia’s export commodities, especially coffee, oilseed, gold, and leather.

The World Bank has been suggesting that the Ethiopian government should devaluate its currency by at least 10 percent, pointing out that in real terms it may lead to a five percent increase in export earnings and two percent increase in growth.

Ethiopia last devaluated its currency in 2010 by 17 percent but the value of Birr against international currencies has been depreciated from time to time due to floating exchange rate.

Yohannes said that the devaluation will not affect inflation rate, as the government has been taking measures to control it.

The devaluation is expected to encourage companies to export huge amount of commodities and could also help to suppress the black market.

The East African nation has also decided to increase the interest rate for domestic savings from 5 percent to 7 percent.

According to Yohannes the move is aimed to enhance domestic savings.