Ethiopia: Devaluation of Birr

(HornTrade) - The recent devaluation of Birr would help enhance the country’s trade competitiveness in the global market, the National Bank of Ethiopia (NBE) said.

In a joint news conference they gave here on Friday, the Deputy Governor of the bank and Financial Institutions Supervisor, Getahun Nana, and Chief Economist and Monetary Stability Deputy Governor, Yohannes Ayalew, said the devaluation of Birr would help enhance the country’s foreign trade.

They said the Birr was devalued on September 1, 2010 from 13.6262 to 16:3514 Birr against a dollar.

Yohannes said the main objective of the devaluation is to enhance the country’s foreign trade competitiveness in the international market.

The devaluation is also aimed at increasing the capacity of local industries and the amount of remittance the country is getting from abroad.

Yohannes said the real value of Birr has remained to be high over the last couple of years due to the gap in demand and supply domestically and the skyrocketing price of food and raw materials in the global market. This has weakened the country’s foreign trade competitiveness in the global market.

For instance, the country’s export revenue in 2001 EC had decreased by 1.2 per cent compared to that of the 2000 Ethiopian fiscal year.

The government has taken series of monetary measures to re-adjust this situation in the last two years through the National Bank of Ethiopia.

According to Yohannes, inflation had decreased from 36.4 per cent in 2001 Ethiopian fiscal year to 2.8 per cent in 2002 EC due the measures taken by the government.

Though the export revenue the country got in 2002 EC had reached two billion US dollar, it had shown a 38.3 per cent compared to the amount secured in 2001 EC.

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