National Bank head cites external shocks, less tourists as reason behind lari devaluation
The price of one USD is more than 2.93 GEL at private banks and currency exchange booths. Photo: Nino Alavidze/Agenda.ge.
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Head of the National Bank of Georgia (NBG) Koba Gvenetadze says that external factors and fewer tourists have made an impact on the exchange rate of the national currency, with one US dollar costing 2.93 GEL as of today.
We have received less tourists than we expected this year, which, of course, had an influence on the rate of the national currency,” Gvenetadze said.
Gvenetadze says that NBG will get involved and will use “its levers” against the increased rate of exchange of the lari if this is necessary.
Russia banned direct flights to Georgia earlier this month and urged its citizens to leave Georgia due to the rallies in central Tbilisi.
The Georgian National Tourism agency says that in 2018 1.2 million Russian tourists visited Georgia.
The agency reported that more than 500,000 Russian tourists entered Georgia in the first five months of 2019, before the ban came into effect.
Experts say that Georgia will suffer about 300 million USD due to the ban on flights.
The Government of Georgia will cover the travel expenses of those passengers who will travel from any Russian airport to Georgia via Yerevan. A total of 600,000 euros has been issued to finance transit flights, so that each of the passenger will receive up to 90 euros to cover their travel expenses.
Flights between Georgia and Russia have been banned starting today following the recent decision of Russian President Vladimir Putin. The ban on flights was announced after protesters in the Georgian capital of Tbilisi tried to storm the Georgian parliament on June 20 when a Russian MP addressed a forum of politicians at the Interparliamentary Assembly on Orthodoxy from the speaker’s chair.
“Georgia is a safe country for everyone, including Russian tourists”
“Georgia is one of the safest countries for tourism and for travellers from any country, including Russian tourists”, says the Economy Minister of Georgia Natia Turnava.
Over 12,000 Russian citizens have signed an online petition calling on Russian President Vladimir Putin to cancel his recent ban on flights between Russia and Georgia. "Allow flights between Georgia and Russia, as Russian citizens in Georgia are in safety. As for the protest rallies – this is the right of the Georgian citizens”, the text of the petition reads.
The National Bank of Georgia (NBG) plans to sell $40 million on exchange auction tomorrow as the Georgian lari continues to devalue. In a statement released on July 31, the NBG said “despite the positive internal and external macroeconomic dynamics” today’s exchange rate has reached a level “that might pose a risk to price stability” amid “the tourism-related shocks and negative expectations”.
The National Bank of Georgia (NBG) sold $32.8 million on exchange auction earlier today as the Georgian lari continued to devalue. One US dollar cost 2.97 GEL as of today, while based on NBG forecast, it will cost about 2.93 tomorrow.
The National Bank of Georgia (NBG) promises to ensure the long-term stability of the exchange rate of the Georgian national currency, the lari, and to prevent high inflation.
The NBG has established a limit of 5,000 GEL ($1697/€1537) for transactions at currency exchange booths eligible for cancellation and refund within a 30-minute period.