EBM (ethioblackmarket)

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Ethiopia's Currency Challenge: Shifting Towards a Floating Exchange Rate Ethiopia is facing big decisions about its currency, the Birr, because of advice from the World Bank and the International Monetary Fund (IMF). They suggest Ethiopia should let the market decide the value of its currency, which is called a "floating exchange rate." Right now, it’s the government that sets the price of the Birr compared to the US dollar which is called “controlled exchange rate”, but this has caused problems. The Problem with the Current System Currently, the Ethiopian government sets the exchange rate of the Birr against the US dollar. However, this controlled rate often doesn't match what it’s really worth based on how people are trading it. Because the government often doesn't give enough dollars to meet everyone's needs, a black market for currency has flourished. Here, the Birr trades at nearly double the government’s set rate. This black market essentially operates on a floating exchange rate system because its prices fluctuate based on supply and demand. It more accurately reflects the true value of the Birr than the official rate does. Speculative Surge in Black Market Rates Speculatively, if the government were to adjust the official exchange rate from a significantly lower rate like 56 to a much higher one such as 120 to match the black market—which was previously at 120—the black market rate might react by surging even higher, potentially to around 200. This could be due to several reasons: 1. Expectations of Further Devaluation: Adjusting the rate to match the black market might lead people to expect further devaluation. If people think the currency will continue to drop, they might rush to exchange more Birr at even higher rates before the value declines further. 2. Panic Buying: Such a drastic change might trigger panic buying, where people hurry to convert their local currency into foreign currency out of fear of losing value. This reaction is fueled by psychological factors as much as economic ones, driving demand that pushes the black market rate even higher. 3. Inadequate Supply of Foreign Currency: Even if the official rate is adjusted, if the government can't supply enough foreign currency to meet demand, the black market will still thrive. A shortage in supply can naturally lead to higher prices. Benefits of a Floating Exchange Rate Letting the Birr’s value change with the market could make things better. It would help the currency adjust to changes in the world economy and could make things more stable and clear for everyone. Building Trust It's important that people trust the government’s changes. Because a lot of the market values are based on people’s psychology. If people feel confident about the new system, it will work better. The government needs to explain clearly how the changes will help and what they will do to keep things stable. Looking Ahead Moving to a floating exchange rate could be a big step for Ethiopia's economy, helping it fit better with the rest of the world. However, it’s important that the change is made carefully, with lots of input from different people and strong plans to support the economy during the change. The next steps the government takes could be very important for Ethiopia's economic future.

The market is now steady between 117 and 118. This kind of steadiness usually comes before a big change. Most of the time, when this big change happens, it goes up. ➡️https://ethioblackmarket.com

1 Year Historical Data Spreadsheet.

1 Year Historical Data.

🔔 Alert: The USD to ETB rate just hit 113.6400 Br! Whether you're sending money or planning a trip, stay ahead with our live updates. Visit us at https://EthioBlackMarket.com for all your currency updates. 💼🌍

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