Another short week in Ethiopia (with 2 holidays) with little to report on the trading side, as the NY market is well below the highs seen in mid April, shippers’ offers go unanswered. Shippers are starting to deliver on the sales concluded in February, quality remains a concern but is improving (slightly). Shipments still moving at a slow pace, next week we should have official April export figures which will enlighten us better on first quarter business activity. The Coffee & Tea Authority this week decided to reduce Minimum Registration Prices by a couple of cents to just off the lowest prices for 2023, a clear sign that registrations have wavered in the last couple of weeks and a reflection of the lower terminal price.
Forex has been kept at an artificially low level. Since August the Birr has moved from 52 to 54 to the USD, so a less than 4% devaluation in 8 months; however the gap between the Official Rate and the Black Market rate continues to grow, in August the BM rate was 85 and currently it is at 102 corresponding to a 20% devaluation vs the greenback . For now Government’s policy makers continue to insist on trying to control inflation with tight controls on forex rates, however inflation continues to run at around 35% and the economy is stalling. Is this making the best of a bad situation? Exporters seem to have given up on a devaluation in the near future, however most of the current crop continues to be upcountry in the hands of middlemen and mostly, held by farmers.
Negotiations between the OLA (Oromo Liberation Army) and the Government have ended without an agreement: https://www.bbc.com/news/world/africa?ns_mchannel=social&ns_source=twitter&ns_campaign=bbc_live&ns_linkname=645242ad78b1a04df275ba25%26Historic%20peace%20talks%20in%20Ethiopia%20end%20without%20deal%262023-05-03T11%3A41%3A58.043Z&ns_fee=0&pinned_post_locator=urn:asset:3bc242fa-7fd8-477f-9046-233190f9a118&pinned_post_asset_id=645242ad78b1a04df275ba25&pinned_post_type=share
In other news the UN has halted the distribution of food aid: https://www.bbc.com/news/live/world-africa-65361155?ns_mchannel=social&ns_source=twitter&ns_campaign=bbc_live&ns_linkname=64532cfb78b1a04df275bafb%26Ethiopia%E2%80%99s%20Tigray%20probes%20food%20aid%20theft%20as%20WFP%20halts%20operations%262023-05-04T05%3A59%3A52.924Z&ns_fee=0&pinned_post_locator=urn:asset:7a500151-dd9a-4290-a3a1-f64899411692&pinned_post_asset_id=64532cfb78b1a04df275bafb&pinned_post_type=share
Forex Birr 54.19 = USD 1
Have a good weekend.