The Ethiopian birr has lost 60% of its value against the dollar sparking anxiety as customers are forced to pay more for basic commodities and some businesspeople are hoarding.
According to reports, many supermarkets in Addis Ababa are hoarding products in warehouses and only selling small quantities in their stores to escape punishment by city authorities, who have vowed to crack down on hoarders.
In Merkato, the capital’s biggest open-air market, guards are stationed in an attempt to keep businesses from raising prices.
More than 3,000 stores accused of hoarding have been shuttered across the country.
The Addis Ababa City Trade Bureau has warned that more actions will be taken against people who take advantage of the floating of the birr to hike prices.
The new exchange rate policy was a historic decision in a country where the government for decades fixed the price of foreign currencies, allowing a black market to flourish.
Commercial banks now can set foreign exchange prices, and non-bank entities are permitted to operate foreign exchange bureaus for the first time.
The International Monetary Fund approved a four-year credit facility worth $3.4 billion coinciding with Ethiopia’s reforms.
Ethiopia, which suffered foreign currency shortages in the months leading to the reforms, imports many essential commodities.
Experts say Ethiopians face unpredictable days ahead in a country where official salaries have generally stagnated for years.
Those with fixed incomes will be most affected by the floating of the birr, said Getachew T. Alemu, an Addis Ababa-based public policy specialist, adding that the immediate injection of IMF funds will not be enough to absorb the pressure.
Last week, authorities raised the price of ordinary passports from 2,000 to 5,000 birr, shocking many people.
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