TBC Bank Chief Economist Otar Nadaraia names several factors, which strengthen exchange rate of GEL. According to him, one of the main factors is improved foreign exchange inflows into the country.
As of the latest data, Georgia's exports increased by 70% and reached 378 million USD in April. This figure is 22% higher compared to the same period of 2019. Remittances rose by 145% to 194 million USD in the same month, and tourism revenue exceeded 50 million USD in the same month for the first time since the pandemic. These factors maintained a positive trend in May, although their statistics have not been published so far.
Otar Nadaria notes that strengthening of GEL exchange rate is also related to the increase of the monetary policy rate in GEL and grown foreign currency lending by the banking sector. According to him, foreign currency lending became active since April. Nadaraia declares, that this is a risk in itself, but in the current situation it is equivalent to foreign exchange intervention and helps to the strengthening of GEL.
The Government of Georgia has revised the 2021 economic growth target, taking into account the improved economic parameters. According to Geostat, Georgian economy grew by 44.8% in April. Under these circumstances, economic growth target will increase from 4.3% to 6.5%. It is expected that the increased economic activity is currently having a positive effect on the GEL exchange rate.
