The FINANCIAL — The Georgian Lari (GEL) dropped again against the USD by 1.03% over the last 2 weeks, reaching an exchange rate of 1.7446.
The demand for USD at the Foreign Exchange Auction was higher compared to other auctions. Last week 50 million USD was sold. On January 27 commercial banks bought a record volume of USD – 20 million USD. Georgian Banks did not explain why they are increasing the volume of USD purchased.
Lado Mestiashvili, Head of the Treasury of VTB Bank Georgia predicts that during 2010 the GEL rate will be down by 5% against the USD.
“Further changes of the national currency are not only dependent on the demand for USD by commercial banks. Various other factors are also determining it. Accordingly we can forecast that the USD will increase against the GEL by 5%,” Mestiashvili says.
VTB Bank Georgia keeps confidential the details of its currency purchase.
Zura Javakhishvili, Financial Director of KOR Standard Bank told The FINANCIAL that during the Foreign Exchange Auction on January 27, the bank bought 200,000 USD.
Javakhishvili says that from 2010 the Bank has bought the same amount of USD as they did in January 27. “We do not think it’s a significantly large amount,” he says.
Giorgi Kadagidze, president of National Bank of Georgia (NBG) proves that there are no fundamental economic grounds for depreciation of the GEL.
Giorgi Kadagidze explains the recent devaluation of the GEL with short termed seasonal factors, with an intensification of the USD on the world currency market and current flurry.
“The first reason is seasonal factors. As we know January is an economically passive month. Accordingly the volume of cash turnover and demand is low. Another reason is that the USD has strengthened on the world market. The third reason is the strip that is generally followed by society in such situations,” Kadagidze stated in an official press-release.
“Short term devaluation and strengthening of the GEL will always exist and this is part of our policy,” he says.
“I want to assure everyone that the stability of the GEL in the middle and long term is guaranteed,” Kadagidze notes.
Kadagidze also states that NBG has international monetary reserves of more than 2 billion USD.
“We have more than useful resources and all instruments necessary in case of interference in the market,” Kadagidze says.
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