According to a report, the Ethiopian Birr has recently dropped to 92 Birr against the US Dollar. The report added that following this recent fall, the difference between the official and parallel market price of silver has increased to a significant level.
The reason for the outbreak of war between the forces of the Ethiopian government and the militants of Tigray is known.
The difference between the official and parallel market value of the Ethiopian currency against the greenback widened to a new record following the latter’s drop of 92 birr for every dollar. Officially, one dollar buys 52.5 of the local currency.
According to the Bloomberg report, which quoted the Deputy Governor and Chief Economist of the National Bank of Ethiopia, Faqadu Digafe, the revival of war in the Tigray region is one of the main issues affecting the Ethiopian currency. According to many media reports, the war between the Ethiopian government and Tigray militants resumed after a five-month hiatus at the end of August.
The high cost of war financial policies are ineffective
Digafe, who explained how much the conflict has affected Ethiopia’s economy, pointed out that the imbalance between supply and demand of foreign currency is a problem affecting the country. The Deputy Governor also pointed out that the cost of the war is that the monetary policy of the National Bank is currently largely ineffective.
In addition to the war-related costs, Ethiopia also faced the problem of dwindling foreign exchange reserves. According to the report, the landlocked Horn of Africa stock in 2010 By the end of 2021, it reached 3.3 billion dollars, which was enough to cover Ethiopia’s income for only 1.9 months.
Therefore, in an effort to increase the country’s foreign exchange reserves, the National Bank reduced the price of silver by 26 percent between February and May. Also, as reported by Bitcoin.com News, the central bank has currently placed restrictions and controls on the amount of foreign currency that Ethiopian residents are allowed to take out of the country.
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