The central bank's 31st foreign exchange auction attracted bids from 30 commercial banks, with 28 securing allocations at a weighted average rate of 159.7014 birr per US dollar.

The National Bank of Ethiopia (NBE) has allocated 140 million US dollars to commercial banks in its latest foreign exchange auction, meeting nearly 93 percent of the total demand submitted by participating lenders as the central bank continues its scheduled dollar sales under the country's market-based exchange rate system.

The auction, held on Tuesday, attracted bids totalling 150.83 million US dollars from 30 commercial banks, exceeding the amount available by 10.83 million US dollars, according to results released by the central bank.

Of the participating institutions, 28 secured foreign currency allocations, while two banks were unsuccessful.

The weighted average exchange rate of successful bids stood at 159.7014 birr per US dollar, providing the latest indication of the exchange rate at which commercial banks are obtaining foreign currency through the central bank's auction mechanism.

The marginal rate, also known as the cut-off rate, was 158.1820 birr per dollar. Bids ranged from a low of 158.1816 birr to a high of 160.9994 birr per dollar.

The difference between the highest and lowest submitted rates was approximately 2.82 birr, reflecting the range of prices offered by participating banks.

The latest auction marks the second scheduled foreign exchange sale in October under the NBE's auction calendar for the second quarter of the 2026/27 Ethiopian fiscal year.

The central bank had scheduled two auctions of 140 million US dollars each for October 13 and October 27, followed by four additional auctions in November and December.

Under the published schedule, the NBE plans to supply a total of 840 million US dollars through six auctions during the October-to-December period, maintaining a regular mechanism for distributing foreign currency to commercial banks.

Tuesday's auction results show that total submitted bids exceeded the available allocation by approximately 7.7 percent. The central bank supplied 92.8 percent of the foreign currency requested by participating institutions.

The outcome comes more than two years after Ethiopia introduced a market-based foreign exchange regime in July 2024, replacing the previous system of administratively determined exchange rates.

The reform allowed commercial banks to negotiate foreign exchange transactions at market-determined rates, while the NBE retained the ability to intervene through foreign currency auctions.

The policy change formed part of a broader economic reform programme supported by international financial institutions, including the International Monetary Fund, which approved a financing arrangement of approximately 3.4 billion US dollars in July 2024.

Since the introduction of the new exchange rate framework, the central bank has used foreign exchange auctions to supply dollars to the banking system, with participating lenders submitting bids specifying the amount of foreign currency requested and the exchange rate they are prepared to pay.

The auction mechanism also provides a reference for pricing foreign currency within the formal banking system, although the rates established through central bank auctions do not necessarily correspond to the exchange rates offered to retail and corporate customers.

For commercial banks, access to foreign currency remains linked to demand from importers and other customers requiring international payments.

The NBE's latest results did not disclose the individual allocations received by participating banks or the sectors for which the purchased foreign currency would ultimately be used.

The central bank's published schedule provides for the next foreign exchange auction on November 10, when another 140 million US dollars is expected to be offered to commercial banks.

The October 27 auction brings the scheduled October supply to 280 million US dollars, with a further 560 million US dollars planned for November and December.