In the face of runaway inflation in the country’s economy, which surged to 39.2 % last month, the National Bank of Ethiopia has decided to abandon its long serving 100 Birr notes with 200 Birr notes as its highest legal tender.
The bank further disclosed that a currency with 100 birr note as its highest nomination could not sustain the volume of transaction currently performed together with the non-stop, record high inflation in the country.
On the other hand, some of the banks that operate Automatic Teller Machines (ATMs) have been requesting the central bank, the only commissioned government entity to decide on currency denomination, to consider a currency of higher value. According to these banks, thus far, the maximum amount that an ATM customer can withdraw at a given time is limited to
below 4,000 birr for lack of larger notes.
However, economic professionals in the country has argued that facilitating banking operations is not the only reason behind the surprise decision. According to them, even though the volume of transaction in the economy is expanding year-on-year, the purchasing power of the birr in the local market has been greatly reduced.
“In terms of its value against other currencies, the birr is slipping consistently.”