Bearish
🤖 80%
Abiy Seeks New Term as Ethiopia Battles Currency Plunge, Insurgency
The Ethiopian birr fell to a record low of 65 per dollar on the parallel market as import demand surged and dollar supply dried up ahead of the election. Central bank reserves have dwindled to $1.2 billion, covering less than two months of imports.
Catalysts
- ▼ Dollar shortages worsen ahead of election
- ▼ Central bank reserves at critical lows
Risk Factors
- ▲ IMF program revival could unlock dollar inflows
- ▲ Post-election stability might attract repatriated funds
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What is driving the birr's decline?
The birr is under pressure from acute dollar shortages as importers stockpile goods before the election, while $1.2 billion central bank reserves leave little room for intervention. The parallel market rate has diverged sharply from the official rate of 56.
Could the election outcome stabilize the currency?
A clear Abiy victory might bring temporary stability if donors resume aid, but structural issues like an overvalued official rate and low reserves would need IMF-backed reforms for a sustained recovery.