Page 32 - GEORptSep21

The increase in reserves was made possible by the $1.5bn in foreign debt raised by Georgia during the crisis.
By comparison, the $873mn spent by the NBG was roughly three times more than what was seen in foreign exchange auctions conducted during any other year in which such interventions were used. During 2016, the NBG sold $280mn through auctions, while in 2015 the volume of interventions was $287mn, and in 2014 it was $300mn.
The GEL exchange rate depreciated sharply in 2020 during the first wave of the coronavirus pandemic. On March 1, one dollar was worth 2.79 lari, while two weeks later the value reached 2.99, and soon after peaked at 3.40. The maximum rate in the history of the lari was recorded on March 27 last year, when one dollar was worth GEL3.48.
In March, the NBG held three currency auctions and sold $100mn. Panic trading stopped at the end of the month, and the government announced an anti-crisis plan and donor assistance. This broght the exchange rate back to GEL3.15 in April.
In June, the GEL strengthened to 2.95. But not much later the rate depreciated again, which, among other factors, was due to changed expectations about international tourism as the opening of borders did not go according to the plan originally put forward by the government.
Since September, the GEL fluctuations have increased to an even greater extent with it becoming clear that a second wave of the coronavirus was imminent in the country, with another lockdown set to follow.
It was during this period that the NBG intensified its foreign exchange interventions. As a result, $500mn in FX auctions was sold in the fourth quarter.
In a report published in December, Tao Zhang, deputy executive director of the International Monetary Fund (IMF), noted that the need for interventions in Georgia would continue into 2021. On January 6, the NBG held its first foreign exchange auction, selling $30mn.
32 GEORGIA Country Report September 2021 www.intellinews.com