Georgian lari stabilizes

Georgian Minister of Finance Nodar Khaduri has declared the stabilization of the lari rate today. The president of the Georgian National Bank, Giorgi Kadagidze, said that the mid-term rate was no longer influenced by factors affecting the conversion rate. A drop in imports of 18% in April meant that the devaluation rate of the lari was affecting the balance of payments.

Kakha Gogolashvili, the head of the Center of European Studies, told Vestnik Kavkaza that the National Bank was not planning to make any aggressive interferences in stabilizing the currency rate. The government may redistribute funds of budget programs, reduce pressure on the market. The expert predicts that the government will improve the investment climate, achieve stabilization, refrain from taking new loans or using refinancing mechanisms. According to Gogolashvili, a currency rate of 1.8 is unlikely.

The lari may drop by 10 or 15 points, says the analyst. If the dollar costs 2.35 laris, it may be taken down to 2.20 via positive expectations and reduction of speculative operations. Exports to the EU have risen by at least 20% with the help of the free trade zone agreement. The EU market has higher demand than the markets of the CIS, Georgian exports to the EU dropped by 40%.

Emzar Dzhgerenaya, the editor-in-chief of the Ekonimika Gruzii magazine, says that Georgia has very few instruments to stabilize the currency. They include the instruments of long-term increase of exports and investments. The National Bank needs a currency rate of 2.20 laris per dollar.

The Georgian currency had been devaluating to 2.3632 GEL/$1 since November 20, 2014. Since the start of this week, the dollar rate grew by 1.2%.