The GEL has weakened against the USD since August, reflecting deteriorating sentiment toward EM currencies after the TRY collapse. Despite the GEL weakness vs the USD, the GEL’s strengthened NEER and REER since May-18 enabled the NBG to intervene in the FX market and to purchase US$ 112.5mn during the April-September period with the aim to build reserves. We expect the GEL’s seasonal weakness to continue until end-2018, and we see GEL being close to 2.7-75 vs USD till the end of the year, while we see GEL close to 2.5 vs USD in medium term.
Source: G&T
