Walking through the busy streets of Addis Ababa today feels different than it did two years ago. Back then, if you wanted to swap a hundred-dollar bill, you had two choices: a bank counter that offered you 57 Birr or a guy in a quiet alleyway offering you 115. It was a broken system. Honestly, it was a joke that everyone was in on.
But that "official" rate was a fantasy.
Fast forward to January 2026. The exchange rate US dollar to Ethiopian Birr has undergone a seismic shift. As of mid-January 2026, the official bank rate is hovering around 156.23 ETB to 1 USD. If you’re keeping track, that is a massive drop from the 30-to-1 days of 2019 or even the 57-to-1 days of early 2024.
The Birr hasn't just slipped; it has been intentionally cut loose.
The day the Birr started floating
It all traces back to July 29, 2024. That was the day the National Bank of Ethiopia (NBE) finally pulled the plug on its "crawling peg" system. For decades, the government basically picked a number and told banks to use it.
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The result? A massive black market. People weren't bringing dollars into the country through banks because they’d lose half their value instantly. To fix this, Prime Minister Abiy Ahmed’s administration pushed through the Homegrown Economic Reform Agenda. They needed an IMF bailout—about $3.4 billion of it—and the IMF's condition was simple: let the market decide what the Birr is worth.
Within ten days of that announcement, the Birr devalued by 100%. By November 2025, it had breached the 150 mark.
Why is this happening right now?
You might be wondering why the rate keeps climbing even now. It’s not just one thing. It’s a mix of catching up to reality and current global pressures.
- The IMF Factor: The IMF just completed its fourth review on January 16, 2026. They're happy. Ethiopia just got another $261 million because they've stuck to the plan.
- Import Hunger: Ethiopia imports everything—fuel, medicine, wheat, machinery. All that requires dollars.
- Coffee and Gold: These are the big winners. A weaker Birr makes Ethiopian exports cheaper for the rest of the world. In the 2024/25 fiscal year, export revenues jumped 118%.
The goal was to make the "black market" irrelevant. It’s working, sort of. The gap between the bank rate and the parallel market rate is much smaller than it used to be. It used to be 100% higher on the street; now it's often within a narrow margin.
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The cost of a floating currency
Don't get it twisted—this isn't all good news for everyone. If you're a teacher or a nurse in Addis, your salary is likely still in Birr, but your rent and food costs have skyrocketed.
Inflation hit 35% in late 2021 and has been a stubborn beast ever since. While the NBE says inflation is cooling—dropping toward 10.9% in late 2025—the "pass-through" effect is real. When the exchange rate US dollar to Ethiopian Birr changes, the price of a liter of cooking oil changes the next morning.
I talked to a local shopkeeper recently. He told me he has to check the bank's daily "indicative rate" before he even opens his doors. He’s not being greedy; he’s just trying to make sure he can afford to buy his next shipment of stock.
Banks are finally competing
The coolest part of these 2026 reforms? Banks can actually negotiate with you now. Gone are the days of the NBE setting a rigid price. Banks like the Commercial Bank of Ethiopia (CBE) and new private players can set their own buying and selling rates.
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They’re also holding regular FX auctions. Just last October, the NBE held its tenth auction to pump dollars into the system. This keeps the market from seizing up when everyone wants dollars at once.
Practical steps for 2026
If you’re sending money to family or trying to do business in Ethiopia right now, the strategy has changed completely.
Stop looking for the "black market" guys. The risk isn't worth it anymore. With the official rate at 156, the extra couple of Birr you might get on the street doesn't justify the risk of being caught or getting scammed with counterfeit bills. Plus, using the banks actually helps the national economy stabilize.
Watch the NBE auctions. If you’re an importer, the liquidity is better than it has been in decades. You can now prepay up to $50,000 for transactions, which is ten times higher than the old limits.
Diversify your holdings. If you're an expat or a business owner, the NBE now allows you to keep 50% of your export earnings in foreign currency indefinitely. Use that. Don't convert everything to Birr unless you absolutely have to.
The Birr is in a "price discovery" phase. It's painful, it's volatile, but it's finally honest. The days of the 50-Birr dollar are over, and they aren't coming back.