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The Ethiopian birr, the local currency of Ethiopia, has been facing a steady decline in value against major international currencies for some time now. However, the situation has reached alarming levels as the exchange rate against the US dollar has skyrocketed to unprecedented heights.
Currently, the official rate stands at approximately 55 Birr per dollar, while the scarcity of hard currency has pushed the black-market value to exceed 110 birr. This exorbitant premium of over 100% marks a significant occurrence in the nation’s economic history.
Ethiopia joins the ranks of countries worldwide grappling with a substantial depreciation in their currency’s value. Recent data from the Troubled Currencies Project, which monitors exchange rates in black and spot markets, reveals that the Ethiopian birr has depreciated by nearly 40% against the US dollar since January 2022. In fact, Ethiopia has been ranked 13th among countries with struggling currencies, according to the currency watchlist compiled by the Troubled Currencies Project.
In light of this economic crisis, Ethiopia has taken a bold step by expressing its interest in joining the Emerging Economic Alliance BRICS bloc. The BRICS bloc comprises Brazil, Russia, India, China, and South Africa, and is seen as a powerful group of emerging economies. By seeking membership in this alliance, Ethiopia hopes to leverage the collective strength of these nations and address the challenges posed by its depreciating currency and overall economic instability.
As the Ethiopian government grapples with the escalating economic crisis, urgent measures has been put in place to stabilize the Birr and restore confidence in the country’s financial system. The unprecedented decline in the currency’s value has calls for comprehensive reforms and strategic interventions to mitigate the impact on the economy and the lives of the Ethiopian people.
