Ethiopia's central bank has spent $2.2bn this year defending the sliding birr;
last week's intervention drew bids about four times the amount offered. The
measures have not halted depreciation: the birr is down 3.2% YTD and hit a
record low near 162 per USD, making it one of Africa's weakest currencies over
the past year. Rising oil prices and the Iran conflict have pushed up fuel and
fertilizer import costs and cut remittances from Gulf workers, adding pressure
on external balances. Standard Chartered Africa economist Sarah Baynton-Glen
said the FX shortfall is driven by a structural current account deficit. As an
oil importer, Ethiopia typically sees greater depreciation pressure on the birr
when oil prices rise.
