According to the World Bank’s most recent Africa’s Pulse report, which was released on April 23 during the IMF–World Bank Spring Meetings in Washington, the Ethiopian birr and Nigerian naira were among the worst-performing currencies in Sub-Saharan Africa in 2024.
The Ethiopian birr saw the second-largest decline, dropping more than 50 percent against the U.S. dollar.
Top three worst performing currencies in Africa
The South Sudanese pound had the biggest decline, followed by Ethiopian birr and Nigerian naira, according to the yearly economic update. Over the course of 2024, all three currencies saw losses of more than 40 percent as governments struggled with shifting policy frameworks and macroeconomic turmoil.
“The weakest performing currencies over the past year were the South Sudanese pound, the Ethiopian birr, and the Nigerian naira, with reductions in value that exceeded 40 percent in 2024,” the report stated.
Ethiopia’s monetary and exchange rate policy
A broad change in monetary and exchange rate policy coincided with Ethiopia’s depreciation. The National Bank of Ethiopia established a benchmark rate of 15 percent and started open market operations to regulate interbank rates in July 2024 as part of its interest rate-based policy framework. A market-based exchange rate regime with minimal foreign exchange intervention had been implemented by the end of that month.
These actions were a part of a larger plan to restore economic stability and create the framework for more sustainable growth, despite the fact that government officials said they were painful.
According to the World Bank, nations with heavy external debt loads and poor export results were vulnerable to sharp currency depreciation.
“African countries that experienced foreign exchange shortages—as a result of increased external debt service and subdued export revenues—saw their currencies weaken sharply, particularly in 2024,” the report said.
Best performing currencies in Africa
In contrast, better capital flows and market reforms helped some currencies. “As financial conditions became less restrictive and the gains from foreign exchange market reforms began to materialise, some African currencies gradually started to strengthen,” the report noted.
While the South African rand and other currencies linked to it have only slightly fluctuated this year, the Kenyan shilling has remained relatively stable after appreciating by 20 percent in 2024.
The relative stability of the birr thus far in 2025 represents a significant change for Ethiopia. According to year-to-date data, the currency has remained stable, and analysts are cautiously hopeful that the reform programme is starting to show results.