Georgian Currency: Worst Drop Since March 2015

Georgian currency depreciated by a record 1.3%, falling to 2.40 against the US Dollar this week.

On Monday, the National Bank of Georgia (NBG) set the biggest single-day drop rate since March 2015; and by Tuesday, August 25, exchange kiosks in the country were selling the US dollar for about 2.44 GEL. The same day, commercial banks in Georgia sold the US dollar for about 2.44 – 2.48 GEL

“Naturally, ongoing geopolitical problems influence Georgia,” said Archil Mestvirishvili, NBG Vice President. “The main factor is negative expectations concerning the GEL depreciation in autumn.”

“Economic shocks and expectations have already influenced the national currency and the monetary incomes that impact the GEL have already been reflected in imports dynamics. We do not expect any additional fluctuations in the GEL exchange rate,” he added.

Economic Minister Giorgi Kvirikashvili said on Tuesday at a Government meeting that Georgia’s macro-economic parameters showed external shocks that have put pressure on the currency. This included the falling of Georgia’s external earnings from remittances and exports which have already been “completely offset,” along with declining imports. Minister Kvirikashvili further continued that this record single-day drop was a result of “speculative transactions” and “stirring” among market participants.

Following the remarks of the Economy Minister, Georgian Prime Minister Irakli Garibashvili said: “We can conclude that we are facing obvious speculation and stir; that’s an emotional-psychological factor.”

The PM went on to ask businessmen and the general population to disregard the stir caused by media and experts, and to take into consideration only the information the government provides.