Ethiopia has spent about $2.2 billion in 2026 supporting the birr, but the currency has continued to weaken, underscoring persistent pressure in the country’s foreign-exchange market.

The birr has fallen 3.2% against the U.S. dollar in 2026 to nearly 162 per dollar, making it the weakest-performing currency over the past year among 23 African currencies tracked by Bloomberg.

Pressure on the currency has intensified as higher oil prices have increased Ethiopia’s import costs and added to demand for scarce foreign exchange. A recent central bank intervention drew bids for roughly four times the amount of dollars on offer, highlighting the strength of demand for hard currency and the scale of the gap between official supply and market demand.

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The birr has been under strain since Ethiopia carried out a major devaluation in 2024 as part of IMF-backed economic reforms. Higher fuel and fertiliser costs linked to the Iran conflict, together with weaker remittances from Ethiopians working in Gulf countries, have added to the pressure.

The gap between official and parallel-market exchange rates has also widened. The dollar was trading at around 180 birr in Addis Ababa, about 15% above the official rate, a spread that reflects how tight access to foreign currency remains for households and businesses reliant on imports.

Continued intervention could place additional pressure on foreign-exchange reserves. Ethiopia’s central bank has not disclosed its reserves in dollar terms, but the IMF estimated them at about $5.9 billion in July 2026.

The government is also expecting a wider budget deficit in the fiscal year that began in July 2026, partly because of higher spending on fuel subsidies.

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