National Bank official: purchase of $1.7 bln didn’t prevent currency from “historic strengthening”

Davit Utiashvili, the Head of Financial Stability Department at National Bank of Georgia, on Tuesday said the Bank's purchase of about $1.7 billion over the past year and a half had not prevented the national currency lari from “historic strengthening”.

He added maintaining international reserves “at an adequate level” was one of the main prerequisites for the macroeconomic stability of the central bank and the confidence of investors.

Utiashvili noted the National Bank had a policy of accumulating reserves through interventions, which was also recommended by the International Monetary Fund.

Buying based on currency rule is considered the most efficient way to do this, and has the least impact on market dynamics. Over the last year and a half, approximately $1.7 billion was purchased, but it did not prevent the historic strengthening of the real exchange rate. Temporary fluctuations are mostly caused by one-time factors”, he said.

• Acting Governor of central bank says national currency showing “historic” strengthening

The official added when the annual turnover of the foreign exchange market reached $100 billion, the impact of NBG’s currency rule interventions could not be material.

However, the exchange rate is still determined by fundamental factors, and information on them is available with a greater delay than on interventions”, he said.

Utiashvili added the National Bank was “one of the most transparent organisations” and stood out among comparable central banks with the quality of transparency.

The Bmatch trading platform of Bloomberg, which provides automatic matching and execution of counterparty transactions, was introduced in Georgia in 2022.