Georgian central bank sells $40 mln to supply foreign currency to the market

The National Bank of Georgia (NBG) sold $40 million during its foreign exchange auction today. 

The average weighted bid rate was 3.2641.

The NBG Head Koba Gvenetadze said last week that the central bank will sell more than $200 million by the end of this year.

He explained that the purpose of the interventions is not to control the lari's depreciation against the US dollar, but serves to supply foreign currency to the market.

I would like to remind you that Georgia has a floating exchange rate regime, which is an optimal choice for a small, open economy like ours. Interventions during the pandemic do not interfere with the market behavior of the lari. The aim of the current interventions is to supply foreign currency to the market. 

Although it is impossible to say where the equilibrium exchange rate of a currency is in terms of floating exchange rate, in all probability, the lari has depreciated past its equilibrium point today. After overcoming the uncertainty surrounding the pandemic and overcoming the traditional election campaigning, the rate will return to its equilibrium point", said Gvenetadze.

Gvenetadze said that the impact of the pandemic on the Georgian economy was mainly reflected in the practical disappearance of revenues from tourism. 

He said that the country’s economic team has attracted large amounts of foreign currency aid in to assist the pandemic-damaged economy, which will be provided to the economy in stages this year and possibly in the first half of next year.