Georgian Lari continues to depreciate against US Dollar
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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.
The suddenly decreasing value of the Georgian Lari is the lowest it has been against the US Dollar since 2010.
As of January 31, 1 GEL is valued at 1.7819 USD - the lowest it has been against the US Dollar since 2011.
Currently, the steadily decreasing value of the Georgian Lari is the lowest it has been against the US Dollar since 2011. As of January 18, 1 GEL is valued at 1.7678 USD.
National Bank of Georgia’s (NBG) President Giorgi Kadagidze said the bank may tighten cash conditions in the financial system to address the inflation risks.
The National Bank of Georgia (BoG) believes there is no risk of higher inflation than what has been forecast as the Georgian Lari continues to depreciate in value against the US Dollar. It is currently the lowest it has been in four years.
An International Monetary Fund official believes the recent fluctuations of the Georgian Lari will not shake the country’s macroeconomic foundation.
Chief Economist for the Europe and Central Asia region of the World Bank Hans Timmer believes the recent tumble of the value of the Georgian Lari has nothing to do with the weakness of the Georgian economy.
Georgia’s national currency faces no fear in value, and on the contrary in the coming days it will become even stronger, said Georgia’s Prime Minister said today after the Lari fell to its lowest level in early December 5 since May 2004.
This year’s budget will be 100 percent fulfilled and all funds will be spent appropriately, said Georgia’s Finance Minister Nodar Khaduri at today’s Government meeting.
Head of the National Bank of Georgia (NBG) Giorgi Kadagidze has been named as the Central Bank Governor of 2014 for Europe by the prestigious Banker Magazine.