The Ethiopian birr has continued to depreciate due to the political unrest that took place in recent weeks, according to the National Bank of Ethiopia (NBE). Before the riots the dollar had a purchasing power of 8.67 birr, and up to yesterday this had reached 8.67 birr. In parallel markets the dollar had a purchasing power of 8.70 birr and 8.97 birr before and after the strike respectively.

One of the souvenirs shops that exchange the dollar told The Reporter that during the violence people hoarded money due to speculation. Beside this, they want to hold money in dollars. This increases the demand for the dollar. Thus, this situation leads the dollar to appreciate and the birr to depreciate. As he put it, the dollar has appreciated by $0.27 in the parallel markets. This indicates that people want to exchange the dollar in the parallel markets rather than in banks because they are not allowed to exchange a huge amount of money in banks unless they have some reasons to do so.

On the other hand, the pound had an exchange rate of 15.34 birr before the strike in the NEB. Yesterday it had declined to 14.89 birr, i.e. by 0.45. birr. According to NEB, this week the exchange rate for the pound had declined whereas that of the dollar had increased.

This shows the demand for the dollar has risen which implies that people are not holding money in pounds. In addition, since they are terrified by the strike the only safe place for their money is to hoard in dollars in order to transfer it to other countries.

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