Money in Ethiopia used to feel fixed. It was a "crawling peg," a slow-motion dance where the National Bank of Ethiopia (NBE) basically told you what a dollar was worth. That world ended in July 2024. Now, if you're looking at the birr to usd exchange rate, you’re looking at a moving target that has left many wallets feeling significantly lighter.
Honestly, the shift was a shock. Overnight, the birr didn't just slide; it dove. We saw a 30% drop in one go, a move aimed at satisfying IMF requirements for a massive $10.7 billion rescue package. Fast forward to January 2026, and the official rate is hovering around 155 ETB to 1 USD. If you’re checking your banking app today, you’ll see minor fluctuations—maybe 0.2% here or there—but the broad trend has been a painful, consistent weakening.
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People often ask why the "official" rate matters when the black market exists. It’s a fair point. For years, the parallel market was the only place to actually find dollars. But the gap is narrowing, albeit slowly. In late 2025, the parallel market was pushing 180 birr per dollar, while banks were at 150. That 15-20% premium is still there, but it’s a far cry from the days when the black market rate was double the official one.
Why the Birr is still sliding in 2026
You've probably heard the government’s talking points. They say the "market-based" system is working. And in some technical ways, it is. Foreign reserves at the NBE have tripled, mostly because they’re buying up gold like crazy.
But for the average person in Addis or Dire Dawa, the "market" feels like a hungry ghost. Why does it keep falling?
- Import addiction. Ethiopia buys way more than it sells. From fuel to medicine to the machinery needed to build factories, everything costs dollars. When the birr loses value, those imports get pricier, and the demand for "hard currency" (USD) stays high regardless of the price.
- The Debt Shadow. Ethiopia defaulted on its debt back in late 2023. While the IMF deal and recent reviews—like the fourth review completed just yesterday in January 2026—have unlocked billions, the country is still in a "debt restructuring" phase. Investors are cautious.
- Security Costs. It's the elephant in the room. Ongoing instability in regions like Amhara and Oromia means the government spends a fortune on security. That money isn't going into the "productive" economy that creates exports.
The IMF recently released another $261 million because Ethiopia is "meeting its targets." This sounds good on paper. However, those "targets" often include tightening the money supply, which means higher interest rates. Good for the birr? Maybe. Tough for a small business owner trying to get a loan? Absolutely.
The 10% Inflation Myth
The official numbers are out for December 2025, and they claim inflation has dipped to around 9.7%. Single digits! It should be a celebration.
But walk into a shop. The price of a kilo of coffee or a liter of cooking oil doesn't care about a "statistical milestone." Because the birr to usd exchange rate has depreciated over 160% since the reforms began, the "pass-through" effect is massive. When the currency drops, the price of transport goes up. When transport goes up, the price of onions in the market goes up.
There is a massive disconnect between the "macro" success of the NBE and the "micro" struggle of the household. The government even had to pass a 550 billion birr supplementary budget just to subsidize fuel and medicine so the country didn't descend into total chaos.
What about the "New" Forex Bureaus?
One of the biggest changes lately is the rise of independent forex bureaus. You don't just have to go to a massive bank anymore. These bureaus were supposed to kill the black market.
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They haven't. Not yet.
The bureaus are often more expensive than the banks—sometimes charging 170+ birr per dollar—but they actually have the cash. If you need 500 dollars for a flight or a medical trip, the bank might put you on a "queue" that lasts weeks. The bureau gives it to you now, but you pay the "convenience" tax. It’s basically legalized black market trading, and it’s where the real birr to usd exchange rate lives.
What you should actually do
If you’re managing money in Ethiopia or sending remittances from abroad, the strategy has changed. The old "wait for the rate to get better" trick doesn't work anymore because the NBE isn't going to step in and "save" the birr. They’ve basically promised the IMF they won't intervene unless things get "disorderly."
- Stop Hoarding Birr. Honestly, keeping large amounts of cash in birr is a losing game. With the currency losing 20-25% of its value annually against the dollar, your savings are evaporating.
- Use Formal Channels for Remittances. It used to be that the black market gave you so much more that it was worth the risk. Now, with bank rates at 155 and the black market at 175-180, the gap is smaller. Using apps like Wise or TapTap Send is safer and supports the official reserves, which eventually helps stabilize the rate.
- Watch the Gold Auctions. The NBE is now selling USD to banks through bi-weekly auctions. These auctions (usually around $150 million a pop) are the best indicator of where the rate is headed. If the NBE stops the auctions, expect the birr to tank again.
The birr to usd exchange rate isn't just a number on a screen; it's the pulse of the country’s recovery. We are in a transition. It's messy, it's expensive, and for most people, it's painful. But for the first time in fifty years, the price of the birr is starting to reflect the reality of the economy, not just the wishes of a central bank governor.
To stay ahead, track the bi-weekly NBE auction results and keep a close eye on the fuel subsidy phase-outs. As the government pulls back on subsidies, the demand for dollars to pay for "true cost" fuel will likely put another round of pressure on the birr. Plan your large purchases or currency conversions around these windows of volatility.