National Bank of Georgia not expecting lari to devalue sharply

TBILISI. Jan 31 (Interfax) - The National Bank of Georgia (NBG) does not expect the lari to devalue sharply, with the national currency's exchange rate currently being influenced by the general strengthening of the dollar, said Natia Turnava, the NBG's acting governor.

"We are not expecting a sharp devaluation of the lari, and we have no reason to. The only thing we need to take into account is the global strengthening of the U.S. dollar, the so-called Trump effect. We cannot avoid this, because we are an open economy and the dollar rate does not depend on us," commersant.ge quoted Turnava as saying.

"Internal pressure is not having much impact on the lari exchange rate today," she said." "Of course it would definitely not be a good thing if some tourist group or other canceled their visit here [to Georgia] due to the negative media coverage, but so far we have not seen anything in particular," she said.

Turnava said the dollar had strengthened against all currencies. "However, if we compare November and December, the lari has depreciated against the dollar by 5-6%, which is not critical at all, unlike the election period, when expectations worsened and there was very strong demand for the dollar and the risk that the lari would instantly depreciate, forcing us to intervene," she said.

"The lari exchange rate is currently fluctuating in quite a decent range - if we take this week as the general rule, then on Monday and Tuesday it strengthened, yesterday it depreciated a little, today it strengthened again, and so on," she said.

The official exchange rate is 2.8761 lari/$1 as of January 31.

The lari has fallen 2% against the dollar since January 1 this year. It fell 5% in 2024. Georgia's national currency began to weaken markedly in May last year amid the domestic political crisis, which intensified in late October after the parliamentary elections, which the EU and U.S. do not recognize, and the decision by the Georgian authorities to suspend negotiations on accession to the EU until 2028. The NBG made record currency interventions of $591 million in October to prop the lari up, reducing the country's reserves to their lowest level in 28 months.

Georgia's international reserves decreased by 11.2% or $562.1 million over the past year to $4.448 billion as of December 31.