ADDIS ABABA (Reuters) - The Ethiopian birr was devalued by 16.7 percent on Wednesday, according to exchange rates published on the central bank’s website.
The birr was quoted by the National Bank of Ethiopia at a weighted average of 16.3514 against the dollar compared with 13.6284 on Tuesday. A central bank official confirmed the new rate but was not authorised to make further comment.
Last month, the government unveiled an ambitious five-year economic plan which targets average annual economic growth of 14.9 percent over the period and aims to end the Horn of Africa nation’s dependence on food aid.
Ethiopia is Africa’s biggest coffee exporter and the world’s fourth largest exporter of sesame. It is also one of Africa’s biggest potentional markets — with a population of 80 million — and most of its people have no telephones or bank accounts.
Devaluations can spur economic growth and reduce current account deficits to the extent they boost exports and discourage imports, although they carry the risk of importing inflation.
Ethiopia’s inflation rate slowed to 5.7 percent in July.
The country — still one of the world’s poorest with nearly 10 percent of the population relying on emergency food aid last year — is keen to attract foreign investment in agriculture and mineral exploration.
Ethiopia has operated a managed floating exchange rate regime since 1992.