The President of the National Bank of Georgia Koba Gvenetadze commented on the recent fluctuations of the GEL exchange rate. In early February, national currency strengthened by 5% against the dollar and amounted to 2.92 GEL, although since then the exchange rate has depreciated again and 1USD made up 3 GEL.
Koba Gvenetadze states that no central bank in the world comments on such short-term exchange rate fluctuations, but says that due to the floating exchange rate regime in Georgia, the fluctuations will continue in the future.
"Central banks do not make comment on the exchange rate change. It is impossible to comment on this.
As for the fluctuation, it always will be. During a floating exchange rate, the various expectations taking place in the world or the region are reflected in the exchange rate. When, there is high inflation, the NBG is using the Bmatch platform to make interventions, however, this does not mean that it will eliminate inflation.
It is very important that when the exchange rate is determined by a fundamental factor, it is impossible to fight it.
The floating exchange rate is characterized by fluctuations. The NBG does not comment on short-term fluctuations," said the president of the National Bank.
Koba Gvenetadze explains that the depreciation of the GEL during the last two years was due to the lost foreign exchange earnings.
"As you know, the pandemic had many unintended consequences, shipping costs increased, delivery costs were interrupted, there were big changes in trade, in 2020 the economy also shrank. Georgia, which received large revenues from tourism, and in 2019 it was $ 3.3 billion, and this amount would increase even more in 2020, if not a pandemic due to the cessation of mobility, in 2020 the country lost $ 2.7 billion.
The exchange rate has depreciated, which is why we are saying that dedollarization is necessary so that businesses and citizens are less affected," said the president of the National Bank.
Alexander Dzneladze, President of the Banking Association, believes that there are no elements of artificial intervention in the exchange rate fluctuations.
In addition, according to Dzneladze, since the beginning of the pandemic, the National Bank has been constantly counterbalancing short-term fluctuations and has even entered into certain transactions.
"It is important that one of the main challenges today is the exchange rate recognized by both the government and the National Bank, and it is important that there are no more fluctuations in the future. It is difficult to predict whether it is possible to maintain the rate, because we are facing challenges this year," Dzneladze said.
As of February 17, the national currency of Georgia depreciated by 0.074 tetri against the US dollar, resulting in an official value of 1 USD of 3.0008 GEL. According to the NBG, the national currency depreciated by 0.048 tetri against the Euro, as a result of which the official value of one Euro became 3.4113 GEL.
