3 Dec 2014 - 18:43
The Georgian Lari is continuing to depreciate in value against the US Dollar and is currently the lowest it has been in four years.
As of December 3, $1 USD was valued at 1.8604 GEL.
Since November 18, the value of the Georgian currency against the US Dollar has dropped 5.4 percent.
In the last seven days, the National Bank of Georgia sold nearly $80 million USD at the Foreign Exchange Currency Auction but despite these efforts, the Georgian Lari continues to depreciate.
But it’s not completely bad news, said Georgia’s Finance Ministry.
After summing up the Ministry’s work of the past two years, Minister Nodar Khaduri said surrounding the Lari exchange rate was not his strong point.
"The influence of the Lari exchange rate on the budget is zero. The budget will be performed with more than 100 percent surplus. Before you [journalists] ask the question about Lari exchange rate, please read the local law,” Khaduri said.
However the National Bank of Georgia, who is responsible for the Lari exchange rate in the country, said immediately after the value of the Georgian currency started to decline, that Georgia had a flotation money exchange rate. This meant that the currency was set by the foreign-exchange market through supply and demand, in relation to other currencies.
"Georgia has a flotation money exchange rate [and] the value of the Lari exchange rate depends on the development of the country’s economy,” vice president of the National Bank of Georgia Archil Mestvirishvili told local media on November 19.
Meanwhile, the regional director of the World Bank (WB) for the South Caucasus Henry Kerali believed the Georgian Lari’s depreciation was partly caused by outside factors including the developments in Ukraine.
"On one hand the Lari’s decreasing value against the US Dollar is caused by seasonal factors, like during the New Year season the demand on the US Dollar increase, and on the other hand the development in Ukraine has effected the Lari exchange rate,” Kerali said on Wednesday.
"Georgia’s export to Ukraine has decreased however the number of tourists is increasing.”
Similarly, the value of the Georgian Lari steadily decreased in the same period of last year. At the time the Government said the slow increase of the economy and budget spend were the reasons behind the Lari fluctuation.