Ethiopia devalued its currency, the birr, by 17 percent against the dollar, the third such move in the past 14 months, according to the National Bank of Ethiopia.
The exchange rate was quoted at 16.351 per dollar today compared with 13.628 yesterday, according to the website of the Addis Ababa-based central bank. It was trading at 11.381 on July 10 last year.
The devaluation will crimp imports and make it easier to boost foreign currency reserves. Ethiopia needs to raise its reserves to 3 months of import cover from 2.3 months to cushion its economy from external shocks, a June report from the International Monetary Fund said.
There is a “need for a 10 percentage point real exchange rate depreciation” in order to achieve that goal, the IMF said in the report.
Ethiopia’s trade deficit was expected to grow to $7 billion in the fiscal year to July 7 from $6.3 billion the year before, according to IMF figures.