Giorgi Kepuladze, founder of "Society and Banks" explains, that the recent devaluation of the GEL is related to the softening of the monetary policy.
As Giorgi Kepuladze told BMG, the only factor that may have caused GEL fluctuation in the recent period, is the transfer of savings to foreign currency by the market participants.
"At this stage, the only reason that may have caused the devaluation of the GEL is the decrease in the refinancing rate. The easing of the monetary policy started several months ago, and those who had savings in national currency transferred their deposits to foreign currency.
Perhaps this increased the demand for foreign currency and GEL depreciated slightly. In addition to the positive factors that characterize the decrease in the refinancing rate, there is also another factor. When interest rates on GEL deposits decrease, companies and market participants prefer to transfer savings to foreign currency.
As for foreign exchange inflows, their effect is declined and remittances are reduced significantly, other inflows are still stable. Therefore, in this regard, GEL has less influence. As for expectations, it is an election year and everyone will try to maintain a stable GEL, because one of the important indicators for the population is the exchange rate of the GEL," said Giorgi Kepuladze.
According to the decision of the Monetary Policy Committee of the National Bank, the refinancing rate was reduced by 0.75 percentage points to 8.25%.
