CEEMEA Emerging Markets Strategy: Frontier Strategy July Chart Pack

Research evidence excerpt

CEEMEA Emerging Markets Strategy: Frontier Strategy July Chart Pack

CEEMEA Emerging Markets Strategy

06 July 2026 Citi Research

Ethiopia

In the Africa Economics & Strategy Weekly - Ethiopia and Mozambique: Thinking

about currency adjustments, the Africa economist discussed the following: Ethiopia's

mid-2024 decision to devalue the birr (ETB) represented a major policy shift by the

National Bank of Ethiopia (NBE), forming a key component of the country's

Homegrown Economic Reform Agenda II (HGER II) launched in early 2024. This

reform, supported by an IMF programme agreed in July 2024, marked what the Fund

called "a watershed in Ethiopia's economic management," with the government

stepping back from its interventionist economic role. The exchange rate policy change

initially drove GDP growth and, after an initial inflationary spike, inflation has begun

falling significantly. However, the September 2025 departure of NBE Governor Mamo

Mihretu and his replacement by Eyob Tekalign—previously state minister of finance—

has raised questions about policy continuity, particularly as the ongoing currency

depreciation became politically sensitive ahead of mid-2026 elections for Prime

Minister Abiy Ahmed. While the NBE acknowledges improvements in foreign exchange

availability and reduced waiting times, structural issues persist in the forex market.

The central bank has committed to establishing an interdealer trading platform by

September 2026 and is conducting quarterly assessments of unmet demand at major

banks. The currency's trajectory will likely depend on completing the ongoing debt

restructuring and oil price movements, with expectations that the birr could reach

ETB185-195:US$1 by end-2026 (versus the consensus forecast of ETB172.3:US$1),