Lari rate strengthening

Don’t hold your breath, but the Georgian Lari has been strengthening for several days. This is amazing when we consider that the currencies of neighbouring countries are falling dramatically.

On March 13 the National Bank of Georgia purchased USD 5.2 million whereas just five days ago it sold USD 16.6. Experts refrain from giving one single reason for this newfound currency stability, simply stating that there will always be a tendency for the currency to go up and down in spurts when its rate is floating and not pegged at a specific level.

The head of the Microeconomic and Statistics Department of the NBG says that there is no short term interest rate prognosis and the long term prognosis will not be much changed. However some independent experts think that this strengthening is a short term phenomenon and the longer term picture is still gloomy. Some go further, saying that the lari increase is an artificial manipulation conducted by the Government to strengthen the currency before the protest actions. They maintain that it will also be forced down by the Government as soon as the opposition comes out into the streets, meaning the opposition will be blamed for the country’s economic problems.

Independent experts think that lack of a detailed prognosis from the National Bank of Georgia is also a very bad sign as entrepreneurs cannot make long term plans if the information they use to do this is unreliable and scarce. Demur Giorkhelidze is one of the analysts who has expressed this view.