The Central Bank Sold 140 Million Dollars and the Rate Went Down, Not Up

The National Bank's foreign exchange auction of 13 October 2026 allocated 140 million dollars against bids of 152.09 million dollars — an oversubscription of 8.6 percent. Of the banks that bid, 26 received allocations.

The interesting part is what happened to the price. Bids rose 23.2 percent from the 23 September auction and supply rose 12 percent, yet the weighted-average successful rate declined, from 160.22 birr to 160.1 birr. The cut-off moved the other way, from 158.07 birr to 158.17 birr.

Reading the two rates against each other

A falling weighted average alongside a rising cut-off is not a contradiction; it describes a narrowing distribution. The most aggressive bids came down while the marginal bid came up. Demand grew, but it grew in the middle of the book rather than at the top — which is closer to what an orderly, maturing auction looks like than a scramble.

That is a better outcome than the headline oversubscription suggests. Banks bid for more than was on offer, and still nobody felt the need to reach.

The liquidity cost

Buying 140 million dollars at the auction average implied gross settlement payments of about 22.42 billion birr, drained from the banking system in a single clearing.

That is the mechanism worth watching. Every auction that supplies importers with dollars simultaneously absorbs birr liquidity from the banks that won. The 13 percent interbank rate now sits at the floor of the National Bank's corridor, built around a 16 percent policy rate — the interbank market is awash, not tight, and the auction is one of the few instruments steadily pulling the other way.

For a business waiting on a letter of credit, the operational reading is that the queue is still a queue: 8.6 percent more demand than supply means roughly one dollar in twelve asked for was not granted.

Open

The National Bank has not said whether the 140 million dollar supply level will hold at the next auction, nor published the distribution of allocations across the 26 successful banks. With the interbank rate pinned at the corridor floor and Brent crude above 111 dollars on global markets, the pressure on both sides of this auction is building rather than easing.

Sources: Addis Fortune, 23 October 2026