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GEL devaluation reaches its historical maximum

By Tea Mariamidze
Thursday, September 17
The rate of the US Dollar in Georgia has reached its highest point ever. The National Bank of Georgia (NBG) has set a new exchange rate on September 16, according to which 1 USD costs 2.4170 GEL. The previous day, exchange rate was 2.4015 GEL. Several commercial banks sell the US Dollar for more than 2.50 GEL.

Moreover, national currency slightly depreciated in relation to the Euro too. According to the data of the NBG, from now 1 euro costs 2.7315 GEL, which was 2.7185 Gel before.

Some analysts think that if an active tourist season in the country could not help to stabilize GEL, the process will get worse after the season is completely over.

Others believe that the reduction of exports is the main reason of lari downturn.

“Reduced export declines the dollar inflow in the country, which affects the Lari rate. Further devaluation of the Gel is expected, so foreign importers convert the lari into the dollar when they sell their products in Georgia. This causes more depreciation of National currency”, analyst Akaki Tsomaia sad.

According to economic expert, Emzar Jgerenaia, there is only one way to strengthen GEL-National Bank should start interventions on the currency market.

“Nearly 100 million is needed to stabilize the situation and fill the existed gap among GEL and US Dollar in Georgia,” he said.

Giga Bedineishvili, Free University and Agricultural University Business School Dean, believes that Lari devaluation may turn into inflation.

“Irresponsible economic policy continues in the sense that almost everything in the country is on subsidy, which causes more economic problems", stated Bedineishvili.

The opposition blames the government in creating “false expectations”, when in summer they stated that Gel would start to stabilize in September.

Member of the Free Democrats, Zurab Abashidze says that the recent separation of Financial Supervisory Agency from the NBG will create additional problems in currency field.

It should be noted, that he devaluation of lari against US Dollar started in November 2014, when 1 dollar was worth 1.7542 GEL. Since then, the process has become irreversible.