We have commented in the past weeks that the forex rate has been stable in 2022, however the official rate hides problems that underlie the Ethiopian economy. Below we track the Black Market exchange rate USD/Birr and it is clear to see that the Central Bank official rate is not reflecting the real value of the local currency. The graph below shows that while the the official forex rate has declined by 4% since January, the Black Market rate has moved by 10 times that, 42%!

Farmers and Agrabes are holding coffee, only selling piecemeal, as goods (such as coffee) are believed to be of more value than Birr! The Inflation rate is dangerously high, hovering around the mid 30’s percentage points, another reflection on the low value of the local currency. Are we about to see a big adjustment of the official forex rate?

In other news the BBC is reporting that ethnic Tigrayans are being taken back to their homes giving rise to hopes for a permanent peaceful settlement to the conflict in Northern Ethiopia: https://www.bbc.com/news/live/world-africa-62438202?ns_mchannel=social&ns_source=twitter&ns_campaign=bbc_live&ns_linkname=62fccb0b405bb048e31822a4%26Tigrayans%20held%20in%20camps%20returning%20home%20-%20returnees%262022-08-17T11%3A46%3A48.057Z&ns_fee=0&pinned_post_locator=urn:asset:3a56bad1-7cf7-4cdf-8acf-02070df31f78&pinned_post_asset_id=62fccb0b405bb048e31822a4&pinned_post_type=share

Business activity remains slow and sporadic. Quality continues to be of concern and coffee arrivals in Addis are not as plentiful as hoped for. Empty containers are still hard to comeby, all in all shipment delays persist.

Birr 52.34 = USD 1

Have a good weekend.

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