Lari continues to devalue: reasons for the fall of the national currency of Georgia

2020/09/56405-1600761664.jpg
Read: 1073     14:00     22 Сентябрь 2020    

One of the main reasons for the depreciation of the national currency of Georgia, economists call the deterioration of the epidemic situation in the country, which caused uncertainty in the foreign exchange market.

The national Bank of Georgia set the exchange rate of the lari against the US dollar at 3.2295 GEL/$1 on September 22 . the national currency's exchange rate against the us dollar fell by 3.7% over the week.

At what point the national currency will stop, economists can not predict - they consider the steps taken by the National Bank of the country ineffective and give recommendations to the authorities.

At the same time, the national Bank assures that it will use all its reserves to avoid a rapid fall in the lari. He has already sold almost $ 400 million, participating in 13 auctions. The national Bank last sold $ 40 million on September 16.

The official exchange rate of the lari against the dollar has been established since may 2009 by aggregating transactions on the interbank market of the Bloomberg trading system.

Recommendations to the government

One of the main recommendations is to increase domestic production to stabilize the exchange rate in Georgia, so that the country does not depend on imported products and, accordingly, the dollar exchange rate will affect the country and the population less, said Shota Gulbani, a member of the Board Of the TSU center for analysis and forecasting.

"The main weakness of our economy is not the depreciation of the lari against the dollar, but the still high level of dollarization and the degree of dependence on imports. This is why these two economic factors are very prevalent in our economy, "Gulbani said at a meeting with reporters at the Kvira press club.

According to him, any fall in the exchange rate of the lari against the dollar, first of all, will lead to a deterioration in monthly payments by those borrowers who once took out a loan in dollars.

"Also, the main part of our consumption is imported products. To meet our annual consumption, we need to raise large amounts – we are talking about about 5.5 billion dollars a year. Therefore, when the dollar strengthens against the lari, the direct pressure falls on the consumer price index," the economist said.

It is because of these two factors that changes in the monetary policy of the National Bank do not affect the extent to which they should act, usually in conditions of a low degree of dollarization, gulbani said.

Sputnik-georgia.ru





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Lari continues to devalue: reasons for the fall of the national currency of Georgia

2020/09/56405-1600761664.jpg
Read: 1074     14:00     22 Сентябрь 2020    

One of the main reasons for the depreciation of the national currency of Georgia, economists call the deterioration of the epidemic situation in the country, which caused uncertainty in the foreign exchange market.

The national Bank of Georgia set the exchange rate of the lari against the US dollar at 3.2295 GEL/$1 on September 22 . the national currency's exchange rate against the us dollar fell by 3.7% over the week.

At what point the national currency will stop, economists can not predict - they consider the steps taken by the National Bank of the country ineffective and give recommendations to the authorities.

At the same time, the national Bank assures that it will use all its reserves to avoid a rapid fall in the lari. He has already sold almost $ 400 million, participating in 13 auctions. The national Bank last sold $ 40 million on September 16.

The official exchange rate of the lari against the dollar has been established since may 2009 by aggregating transactions on the interbank market of the Bloomberg trading system.

Recommendations to the government

One of the main recommendations is to increase domestic production to stabilize the exchange rate in Georgia, so that the country does not depend on imported products and, accordingly, the dollar exchange rate will affect the country and the population less, said Shota Gulbani, a member of the Board Of the TSU center for analysis and forecasting.

"The main weakness of our economy is not the depreciation of the lari against the dollar, but the still high level of dollarization and the degree of dependence on imports. This is why these two economic factors are very prevalent in our economy, "Gulbani said at a meeting with reporters at the Kvira press club.

According to him, any fall in the exchange rate of the lari against the dollar, first of all, will lead to a deterioration in monthly payments by those borrowers who once took out a loan in dollars.

"Also, the main part of our consumption is imported products. To meet our annual consumption, we need to raise large amounts – we are talking about about 5.5 billion dollars a year. Therefore, when the dollar strengthens against the lari, the direct pressure falls on the consumer price index," the economist said.

It is because of these two factors that changes in the monetary policy of the National Bank do not affect the extent to which they should act, usually in conditions of a low degree of dollarization, gulbani said.

Sputnik-georgia.ru





Tags: