NBG sells $46 mln at foreign exchange - how has the lari fared since the beginning of the pandemic?

The National Bank of Georgia (NBG) sold $46.55 million at foreign exchange auction today.

The average weighted bid rate was 3.3132.

This was the 24th intervention this year and as of now the bank has sold $823.4 million in total.

As of today, 1 USD costs 3.3138 GEL, while 1 EUR costs 3.9424 GEL.

However, NBG Head Koba Gvenetadze said back in September 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,” he said.

In mid-September Georgian Economy Minister Natia Turnava said that 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", she noted.

Since February 26, the day when the coronavirus case was first registered in Georgia, the lari has depreciated against the US dollar.

1 US dollar cost 2.7946 lari on February 26. Then the cost of the US dollar reached its record high of 3.3613 lari on November 7 and then decreased a bit to 3.3193 lari as of today.

Photo: National Bank of Georgia.

How has the value of the lari changed relative to the currency of neighbor countries?

As for neighboring currencies the value of lari declined somewhat against the Armenian dram, Azerbaijani manat and the Russian ruble.

1000 Armenian dram cost 5.8373 GEL on February 26, while it costs 6.5534 GEL now. As for the Azerbaijani manat, on February 26, 1 AZN cost 1.6481 lari, while now it costs 1.9525 lari.  On the day the coronavirus case was first recorded in Georgia, 100 Russian ruble cost 4.2607 GEL, while today 100 RUB costs 4.3629. 

However, the lari appreciated against the Turkish lira. 1 TRY cost 0.4542 GEL on February 26, while it costs 0.4171 GEL as of today.

How have currencies of neighboring countries changed against the US dollar since late February?

The value of the Russian ruble depreciated against the USD. 

Based on the Central Bank of the Russian Federation, on February 26, 1 USD cost 64.9213 ruble, while now it costs more - 75.4727 ruble.

The Armenian dram has depreciated against the USD as well since late February. The data from the Central Bank of Armenia show that 1 USD cost 478.39 Armenian dram, while now 1 USD costs 511.69 AMD.

The Turkish lira also depreciated against the USD following February. 1 USD cost 6.1574 Turkish lira on February 26, while now it costs 7.9558 Turkish lira.

As for the Azerbaijani manat, the central bank of the country says that 1 USD costs 1.7 AZN as of August 5. The Azerbaijani manat has declined against the euro and risen against the Russian ruble, while it is stable against the US dollar, the bank says.