Page 30 - GEORptAug19

7.0 FX
Georgia - Foreign exchange rate
2013
2014
2015
2016
2017
2018
Mar’19
Jun’19
Currency (units per EUR) (average)
2.209
2.346
2.520
2.617
2.832
3.054
3.037
3.132
Currency (units per USD) (average)
1.663
1.766
2.270
2.367
2.509
2.485
2.684
2.777
Georgia’s central bank to intervene to smooth currency depreciation
The National Bank of Georgia (NBG) has said it will sell USD 40mn on August 1, with the national currency still weakening.
The lari weakened to 2.97 versus the US dollar on July 31, but it is traded at rates of over 3.0 in exchanges already. It was already on a path of depreciation driven by a wide current account deficit, but the moderate weakening seen by the end of June had already made an impact in terms of the foreign trade balance. The sanctions imposed by Russia at the end of June created negative sentiment, further aggravated by the political instability that might negatively impact inflows from foreign investors.
“Despite positive domestic and foreign macroeconomic dynamics, amid tourism-related shocks and negative expectations, the exchange rate has currently reached the level, which may create a risk to price stability,” the NBG central bank said in a statement of July 31.
NBG also said that the bank would use all means at its disposal “to avoid materialization of this risk.” It also noted that if need be, the National Bank would again intervene on the currency market in the coming days.
“In case of maintenance of the pressure coming from the exchange rate, the National Bank will also tighten its monetary policy,” the statement read.
30 GEORGIA Country Report August 2019 www.intellinews.com