Seven years ago, the government had made a 17pc devaluation resulting in inflation that had reached as high as 40pc.
“Since investment return is high in Ethiopia, the devaluation won’t cause an inflationary pressure and adversely affect import,” said Yohannes.
For more than half a year, the official exchange rate stood at around 23 Br to the dollar, while black-market traders sold a dollar for nearly 29 Br.
The current devaluation surfaced almost 11 months after the World Bank (WB), in its fifth economic update, suggested the government devalue the currency to raise the country’s competitiveness in the global arena. The recommendation, however, was rejected at the time by Yohannes, although the real effective exchange rate (REER) has appreciated in cumulative terms by 84pc since the nominal devaluation in October 2010.
