The Georgian lari advanced for a fourth day, rising to a one-month high on May 21 after suffering significant depreciation over the past six months.
As of late Thursday afternoon the lari was roughly 3% stronger at 2.2545 to U.S. dollar and 2.5% at 2.5151 to euro.
It still remains 28.5% weaker against the U.S. dollar compared to the start of depreciation in early November.
President of the Georgian National Bank, Giorgi Kadagidze, said earlier on May 21 that “no additional pressure on lari is expected in medium term.”
Archil Mestvirishvili, the Vice President of Georgia’s Central Bank, told lawmakers at a hearing of the Parliamentary Committee on Human Rights earlier on May 21 that the strengthening of the lari over the past few days was the result of over 19% year-on-year decline in imports in April and the removal of the overreaction factor from market participants.
Georgia’s foreign trade turnover declined 13% year-on-year in the first four months of 2015. Exports were down by 26% y/y. Imports declined 13% y/y in January-April, reflecting weak domestic demand and the slowdown of economic growth.
At the parliamentary committee hearing the Vice President of the Georgian National Bank was questioned by lawmakers from the Georgian Dream ruling coalition about “how adequate” the Central Bank’s interventions were to support the weakening lari over the past several months.
The central bank sold USD 200 million at a foreign currency auction. Some government members, including PM Irakli Garibashvili and MPs from the GD ruling coalition previously said that the Central Bank should have intervened more actively.
“We pursue policy of minimal interventions,” the Vice President of the Central Bank Archil Mestvirishvili told lawmakers on May 21.
He reiterated the central bank’s position that large-scale interventions would be “counter-productive” during a time of significant external economic shocks that potentially have long-term consequences.
Mestvirishvili appeared before the Parliamentary Committee to deliver the central bank’s annual report. The report failed to receive approval from the members of the committee; UNM lawmakers were not present at the committee hearing. GD MP Gedevan Popkhadze said that the central bank should be more “self-critical” about its handling of the lari depreciation. The President of the Georgian National Bank Giorgi Kadagidze is expected to appear before parliamentary committees next week to present the central bank’s annual report on the fiscal year of 2014.
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