Today, at 16:00, the Bloomberg system showed that 1 USD was worth 3.12 GEL, and today the trade opened at 3.21 against the dollar. It is noteworthy that during the last 15 days, the lari strengthened by about 20 tetri against the dollar.
Bm.ge was interested in what the specialists have to say about the sharp strengthening of the national currency and its forecasts.
Eva Bochorishvili, Head of Research at Galt & Taggart, cites several factors.
"We do not have enough information to understand exactly why the lari strengthened on this particular day, but now we can say that there are positive expectations for the national currency. As for the positive factors, these are: the opening of the economy, the opening of land borders from June 1, which strengthened the expectations of the resumption of tourism, as well as the message that a tight "Lockdown" will no longer be put in action.
Lockdowns had the toughest impact on the lari. Also, there is an expectation of acceleration of the vaccination process, and an increase in exports and remittances compounds this. Tightening of monetary policy, which took place in April, shall also be mentioned. All of these factors create expectations. As negative expectations are reflected, so are positive ones. The dollarization of deposits has also decreased, i.e., what we call agitated behavior is precise that there has been pressure on the lari, and now it has been reduced. This is also one of the factors that have a positive impact on the exchange rate," he said.
As for the forecasts, the head of Galt & Taggart's research department says that if nothing changes negatively from the existing positive factors, the trend of strengthening will continue.
"We think this trend should continue. The risk factor is always there. GEL has a floating exchange rate, which means that everything that happens in the market affects it," said Eva Bochorishvili.
As for the Turkish lira depreciation impact, she explained, the positive factors are now so strong that they completely outweighed the negative factors associated with the Turkish lira depreciation expectation.
"The devaluation of the Turkish lira often raises the expectation of a depreciation of the lari, which is not further confirmed in the numbers. The positive factors are so strong now that they have completely outweighed the negative factors related to the expectation of a devaluation of the Turkish lira," Bochorishvili said.
She does not expect any form of intervention from the National Bank to stop the sharp strengthening of the exchange rate. Since the currency has depreciated sharply in the last two years, possible intervention is likely counterproductive.
