Georgian National Bank reports “substantial” 2023 dollar purchases, currency reserve accumulation
Tamta Sopromadze, the Deputy Head of the Department of Macroeconomics and Statistics at the National Bank of Georgia, on Monday said the Bank had made “substantial” purchases of dollars throughout 2023, replenishing international currency reserves by about $1.3 billion. Photo: NBG
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Tamta Sopromadze, the Deputy Head of the Department of Macroeconomics and Statistics at the National Bank of Georgia, on Monday said the Bank had made “substantial” purchases of dollars throughout 2023, replenishing international currency reserves by about $1.3 billion.
When the foreign exchange market and macroeconomic conditions permit, we have always purchased and replenished our foreign exchange reserves. We [replenished] our reserves by about $1.3 billion, continuing this trend into the first half of 2024. Our focus on accumulating reserves now allows us to utilise a portion of those reserves as needed”, Sopromadze said.
The Deputy Head said the Bank used to intervene by selling foreign currency in case of market fluctuations. Sopromadze pointed out interventions in October aimed to address pressures on the exchange rate, which were caused by non-fundamental dynamics.
She explained the context behind the increased market pressure, attributing it to “uncertainties” stemming from the pre-election period and one-time transactions, particularly in the purchase direction. She noted the payment of bank dividends coincided with these transactions, further contributing to market strain.
Our intervention strategy is designed to neutralise such influences that arise from non-fundamental factors, which was the primary rationale for the interventions in October”, Sopromadze added.
The official underscored the role that international currency reserves play in maintaining macroeconomic stability in the country. She reaffirmed the National Bank’s commitment to accumulating reserves and mentioned that, under its mandate to maintain price stability, the institution possessed the necessary tools to support a low inflationary environment and stable pricing.
Sopromadze said the country’s macroeconomic situation remained “robust” thanks to the “correct economic policies”, with “stable prices” and a “controlled inflationary environment”.