Ethiopian Birr lost 16 percent of its value over night

An Ethiopian financial expert says:
There are two implications of this devaluation.

1- It makes the country’s exports relatively less expensive for foreigners — a win for Foreigners.

2- It makes foreign products relatively more expensive for domestic consumers — a lose for Ethiopians. This will have immense detrimental impact on the general population. It is the same as taking a 20% immediate pay cut for any fixed income earner. Inflation is going to skyrocket. Prices of imported goods will soon be about double. Prices of domestic products (including agricultural) will also increase as the government is encouraged to export more. Interest rates will consequently rise to control inflation which, intern, will result in slower economic growth.

(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