TBC Capital highlights several key factors supporting the stability of the Georgian Lari (GEL) this year:
Currency Conversions and Larization of Deposits:
The ongoing conversion of deposits into GEL (larization) has accelerated since mid-October and is expected to surpass the April 2024 peak by the end of November. This trend supports GEL demand and strengthens the currency.
Net Foreign Exchange Inflows:
Increased inflows through exports, remittances, and, to a lesser extent, tourism are boosting foreign currency supply in Georgia. This effect is reinforced by a slowdown in imports, particularly the temporary positive shift in net car exports—the first such increase since 2013.
Global Weakness of the US Dollar:
A relatively weaker USD in international markets contributes to the relative strengthening of the GEL.
Central Bank Interventions:
The National Bank of Georgia’s active foreign exchange interventions have played a key role in supporting larization and stabilizing the exchange rate. From March to November, the NBG purchased a total of $2 billion USD to maintain stability.
While some improvements, such as car trade dynamics, may be temporary, overall GEL stability is supported by strong net inflows, larization trends, and global USD weakness. These factors collectively maintain demand for the currency and help keep exchange rate fluctuations in check.
