TBC Capital publishes a weekly update from its chief economist.
Pursuant to the report, September exports print was strong YoY as well MoM, broadly in line with TBC Capital's expectations, while imports have moderated substantially possibly indicating a lower domestic demand. However, other indicators such as google mobility and sectoral turnovers point to a strong momentum.
"On the external side, higher than expected inflation in the US led to even stronger rate hikes expectations leading to an even more elevated differential between off-shore and on-shore dollar rates. Our initial thoughts were the off-shore rates to have rather limited passthrough on the local deposit rates. Thereafter,
we were betting on even lower rates domestically on the back of very high FC liquidity levels in the Georgian banking system. At the moment, as the differential is becoming even wider, probably broadly neutral assessment is the most reasonable. In fact, when looking internationally, the picture is rather mixed in different countries.
As for the recent GEL appreciation pressures, certainly this was well awaited. Going forward we still expect even more surplus on the FX market, though once again betting on higher NBG reserves, rather than material GEL strengthening against the greenback," the report reads.
