Dollar To Birr Exchange Rate In Black Market
The exchange rate between the dollar and the birr has been a topic of concern in Ethiopia. The official exchange rate is set by the government, but there is a thriving black market where dollars can be exchanged for birr at a higher rate. This article will explore the dollar to birr exchange rate in the black market and its impact on the Ethiopian economy.
What is the current exchange rate?
As of August 2021, the official exchange rate is approximately 45 birr to one dollar. However, in the black market, the exchange rate can be as high as 55 or even 60 birr to one dollar. This means that those who have access to dollars can make a significant profit by exchanging them on the black market.
Why is there a black market for dollars?
The black market for dollars exists because of the restrictions placed on foreign currency by the Ethiopian government. It is difficult for businesses to access dollars through official channels, which drives up demand on the black market. Additionally, many Ethiopians receive remittances from family members living abroad, and they often need to exchange dollars for birr. The black market provides a way for them to do so.
What are the consequences of the black market?
The black market has several negative consequences for the Ethiopian economy. First, it undermines the official exchange rate and can lead to inflation. When the black market rate is significantly higher than the official rate, it can create a situation where prices for goods and services increase rapidly. This can be especially harmful to those on fixed incomes who cannot keep up with rising prices.
Second, the black market can lead to a loss of confidence in the government and the financial system. When people perceive that the government cannot provide access to foreign currency, they may lose faith in its ability to manage the economy effectively. This can lead to a lack of investment and slower economic growth.
What is the government doing to address the black market?
The Ethiopian government has taken several steps to address the black market for dollars. In 2019, it launched a new system for allocating foreign currency that is intended to make it easier for businesses to access dollars. The government has also increased penalties for those caught engaging in illegal currency trading.
However, these measures have not been entirely successful in eliminating the black market. Many businesses still struggle to access dollars through official channels, and the penalties for engaging in illegal trading are not always enforced.
Conclusion
The black market for dollars in Ethiopia has significant consequences for the economy and the people who live there. While the government has taken steps to address the issue, more needs to be done to ensure that businesses can access foreign currency through official channels. Additionally, efforts to enforce penalties for illegal currency trading must be increased to deter those who would engage in this activity.