Business Association of Georgia: situation on foreign exchange market is alarming, requires timely intervention
The association suggests that at least during the pandemic, additional approaches should be developed that would return the foreign exchange market to equilibrium and avoid 'a very heavy blow to Georgian business'. Photo: Nino Alavidze/Agenda.ge.
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The Business Association of Georgia announces that the current situation in the foreign exchange market is ‘alarming’ and requires a timely intervention as the devaluation of the national currency and an unstable exchange rate 'weaken economic activity and hinder investment activities'.
The association suggests that at least during the pandemic, additional approaches should be developed that would return the foreign exchange market to equilibrium and avoid 'a very heavy blow to Georgian business'. The association has offered its support to the government in this process.
The association states that the recent efforts of the government to attract funds from abroad and implement different programmes with borrowed financial resources 'had a stimulating effect' on the economy.
Exchange rate of lari against the US dollar from September 6 to November 6. Chart by the NBG.
All these types of assistance are provided through the conversion of foreign currency received in GEL. Therefore, it is important for the National Bank to ensure the supply of foreign currency resources attracted to the market in order to sterilise the increased money supply in the circulation channels.
In order to reduce the pressure on the foreign exchange market during this difficult period, the National Bank of Georgia should continue to supply foreign currency through foreign exchange auctions and make up for the currency shortfall caused by the pandemic in the country", says the Business Association of Georgia.
Georgian Finance Minister Ivane Machavariani said yesterday that the depreciation of the lari is caused by the current political tensions in the country.
He said that returning the political process to a 'constructive framework, within the walls of the parliament' will have a positive impact on the lari exchange rate.
As of today, 1 USD costs 3.4000 GEL, while 1 EUR costs 4.0137 GEL.