Ekaterine Mikabadze, the vice-governor of the National Bank declares, that foreign exchange intervention by the Central Bank was a one-time large transaction, which was carried out to avoid pressure and to neutralize the formation of wrong expectations.
As Mikabadze mentioned in an interview with BM.GE, as a rule, the National Bank sells currency in order to avoid excessive fluctuations.
"This is a one-time large transaction, to mitigate excessive volatility. Due to non-fundamental factors, we usually sell currency to avoid excessive volatility. No central bank and no reserve will be able to combat the devaluation caused by fundamental factors, therefore, we only neutralize the short-term effects to a certain extent", said Ekaterine Mikabadze.
On Wednesday, at the foreign exchange auction held by the National Bank of Georgia sold $64.9 million out of the $70 million. The weighted average exchange rate was set at 2.7139 GEL per US dollar.
Large, one-time transactions continue to influence the foreign exchange market, impacting the Lari’s exchange rate. To prevent excessive fluctuations, the National Bank of Georgia opted to hold today's auction.
It’s important to emphasize once again that these recent fluctuations in the foreign exchange market are not linked to macroeconomic factors and are therefore expected to be short-term.
The country's macroeconomic fundamentals remain strong. Over the past three years, Georgia has experienced solid economic growth, and since 2023, inflation has remained below the target rate of 3%. Preliminary data for September shows a 17% rise in exports and a 4.1% decrease in imports. Additionally, strong foreign currency inflows are helping to sustain the current account deficit at manageable levels.
