Georgian central bank to sell over $200 mln this year to stop lari depreciation

The lari (GEL) has depreciated against the US dollar by about two per cent, following an increased number of new coronavirus cases in Georgia and the upcoming parliamentary elections, said National Bank of Georgia (NBG) Head Koba Gvenetadze. 

In order to control the lari's depreciation against the US dollar, the NBG will sell $40 million at foreign exchange auction later today and more than $200 million by the end of this year, he added.

As of today, 1 USD costs 3.1546 GEL, while 1 EUR costs 3.7521 GEL.

Gvenetadze explained the recent depreciation of the lari was caused by the 'tensions of the election campaign period', which is temporary and will not affect inflation, which according to the current forecast will continue to decline over the rest of the year and fall below the target level in the first half of 2021.

Georgian Economy Minister Natia Turnava said that the fluctuation of the lari is 'moderate' and there are no signs the ‘negative trend will deepen'.

Georgia is a part of the global economy and now the whole world has entered a period of economic crisis. If we look at the recent dynamics of the lari, even though the big challenge is the restriction of tourism, the restriction of foreign trade, the dynamics are not necessarily characterised by large fluctuations. The fluctuations are moderate and if we compare with other countries in the region, the percentage of fluctuations are also low", Turnava said.

Meanwhile, the monetary policy committee of the NBG decided to keep the refinancing rate unchanged at eight per cent.

"As expected, annual inflation continued to decline, reaching 4.8 per cent in August and the downward trend will continue. However, the committee also took into account the risks of inflation expectations, that are associated with increased volatility in foreign exchange markets and persistence of above-the-target inflation for a prolonged period. Against the backdrop of these factors and still a high degree of uncertainty, the committee kept the rate unchanged", said the NBG.