Georgia’s central bank: presidential election period negatively affecting exchange rate of GEL

The Georgian national currency, the lari, continues to depreciate in value against the US dollar as well as the euro. The National Bank of Georgia (NBG) explains that the presidential election period is the reason behind the depreciation. 

Recent exchange rate fluctuations are unrelated to economic fundamentals; the current exchange rate dynamic is negatively affected by the environment surrounding the presidential elections, which is reflected in the foreign exchange market”, read the NBG statement.

The NBG said that there is a floating exchange rate regime in Georgia and this is characterised by short-term fluctuations on the foreign exchange market.  

The NBG strongly encourages public figures and experts to abstain from ‘ungrounded’ statements and forecasts about exchange rate dynamics to avoid the emergence of ‘misleading expectations’.

The NBG also advises the general public and economic agents ‘not to take hasty decisions, which are likely to hurt them’.

As for the public, following the NBG recommendation, people should take loans in the same currency as their income to avoid risks.

The US dollar has reached 2.7656 GEL and 1 EUR - 3.1766 GEL. This is the official exchange rate set by the NBG. However, the exchange rate is higher at exchange booths around the country and at local banks.

The Economy Minister Giorgi Kobulia presumes that the Georgian lari will gain value at the end of the year.

The state of the economy is good. Export is increasing and the economy has grown by six per cent. This will be reflected on the exchange rate”, Kobulia said.

Kobulia said that the lari’s tendency to strengthen is expected ahead of the New Year due to the inflow of foreign currency and from tourism.