Falling 70%! Ethiopia's exchange rate drops

According to local media reports in Ethiopia, on August 4, local time, the Ethiopian Coffee and Tea Authority signed a memorandum of understanding with the Oromi Asian Tourism Commission.

According to reports, Ethiopian coffee is famous all over the world and is one of the main sources of Ethiopia's foreign exchange earnings. The MOU aims to enhance the status of national tourist attractions through the use of Ethiopian coffee by integrating the resources of the two sectors.

According to the Ethiopian Coffee and Tea Authority, Ethiopia earned US $1.4 billion in foreign exchange from coffee exports in the fiscal year ended in Ethiopia, and stressed its efforts to produce quality coffee at present and to generate more revenue in the coming years.

However, people in the coffee industry believe that the biggest dilemma of the coffee industry at present is the exchange rate. All because Ethiopia announced a major revision of its foreign exchange system earlier and made a series of changes, which also led to a sharp decline in the Ethiopian Bill exchange rate, according to the Commercial Bank of Ethiopia, the buying rate went from 95.69 bill to the dollar and the selling rate from 101.43 bill to the dollar, a depreciation of nearly 70 percent.

In recent years, Ethiopians have been suffering from the huge cost of living, and this policy has led to a sharp increase in the pressure on the cost of living. According to local residents, the prices of some commodities have risen beyond imagination. For example, onions have soared from 40 bill per kilogram to more than 70 bill, five liters of cooking oil has risen from 1100 bill to 1500 bill, and Ethiopia's local staple, Tess, has also risen from 160 bill per kilogram to 190 bill. Due to the falling exchange rate, there are likely to be mass public protests in the future.

Although the Ethiopian government is in action, it has recently arrested thousands of business owners on the grounds of unreasonable price increases. And according to reports, the Minister of Trade and Regional Integration of Ethiopia said that the government has been putting more industrial and agricultural products on the market in order to balance the supply and demand of commodities, and that more than 1000 trucks will now deliver the goods to the market. and buy 14 million litres of cooking oil and prepare for distribution.

It is understood that the current government's actions are mainly preparing Ethiopia to regain the African growth and opportunity Act (AGOA), all because the bill can provide Ethiopia with more than 1800 products to enter the US market duty-free, and more than 5000 products are eligible to enter the US market duty-free under the GSP program.

But the US government points out that the Ethiopian government needs to solve the problem of civil unrest outside the capital in order to qualify for AGOA. That is why the government has taken action to ease public pressure and prevent large-scale protests. And Prime Minister Abby said the government has been negotiating with Fano in Amhara and OLA, an armed group in Oromia, to reach a peace agreement.

But after that, both the Fano group and the armed group OLA indicated that they were not negotiating with the government, while the leaders of the Fano militia stressed that Fano was engaged in an armed struggle and was aiming to end the Abi government. The news is unexpected that Ethiopia will usher in a greater armed conflict, which is not conducive to the development of Ethiopian industry.

For the country's important coffee industry, the biggest problem at present is the increase in costs, especially local staple foods and fertilizers, which increase the cost of coffee cultivation, and have limited productivity and are vulnerable to conditions such as the weather. the government's measures have not helped the coffee industry much. Even if the current exchange rate helps boost the export of Ethiopian coffee, the export price of coffee also rises as costs rise, and the current political instability may be more cautious for some buyers.