Experts expect Georgian lari to continue appreciation
As of today, 1 US Dollar costs 2.9805 GEL, while 1 Euro costs 3.3599 GEL. Photo: Nino Alavidze/Agenda.ge.
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Georgian experts expect the Georgian lari to continue appreciating at least until the end of this year if some unexpected event does not occur.
This opinion is based on the opening of the economy after the coronavirus breakout.
The Georgian lari has appreciated by ten per cent, which is rare in the recent history of Georgia. I expect this trend to continue at least until the end of this year…It is related to the international financial aid Georgia has been given,” said Economic Expert Vakhtang Charaia.
He also noted the reduction of Georgia's import dependence as one of the factors behind the lari’s appreciation. He also noted the decrease of demand for the US dollar as a result of losing jobs amid the coronavirus epidemic and the decline in savings in foreign currency.
Financial expert Giorgi Tsutskiridze also expects the lari to appreciate, noting the importance of expectations with other factors.
Panic has a negative effect on the lari even when the economic indices are positive…We have quite a small market and in case of panic individuals as well as legal entities start buying the US dollar to make reserves expecting the lari depreciation, especially at the end of the touristic season when foreign currency inflows are expected to decline,” said Tsutskiridze.
He noted that now expectations are positive instead of negative and that makes lari to appreciate. He said that these expectations are related to the opening Georgian economy after the coronavirus crisis.
[Opening the economy] is a very important factor for legal entities as well as for individuals. Legal entities are hoping the turnover to increase and expect to compensate for the loss gained while the economic activities were interrupted,” said Tsutskiridze.
He noted that legal entities now have no fear and are not starting to buy US dollars as a result of panic, instead they are selling US dollars.
Tsutskiridze noted the importance of the $3 billion in international financial aid Georgia received amid the coronavirus crisis and the anti-crisis plan of the Georgian government in the process of creating positive expectations.
Tsutskiridze expects increased demand on foreign currency after opening the economy but claims that receiving international financial aid will prevent the market from experiencing a deficit of foreign currency.
As of today, 1 US Dollar costs 2.9805 GEL, while 1 Euro costs 3.3599 GEL.
1 USD costs 3.0118 GEL
Against the backdrop of the outbreak of the coronavirus and the global oil crisis, the Georgian national currency, the lari, has hit a record low against the US dollar after falling to 3.0118.
The impact of the coronavirus is rippling through the Georgian economy, but it might take a few months to fully see the fallout in data that track economic performance in Georgia.
The National Bank of Georgia has sold $40 million to stabilise the Georgian lari against the backdrop of its depreciation. As of today, 1 USD costs 3.1920 GEL, while 1 EUR costs 3.5058 GEL. The bank says that the aim of the interventions is to reduce excess fluctuations in the foreign exchange market and avoid negative expectations on the market.
Georgian Prime Minister Giorgi Gakharia announced earlier today how the government intends to help businesses and agriculture during the COVID-19 crisis.