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NBG says lari devaluation is temporal

By Gvantsa Gabekhadze
Monday, November 6
Georgia’s National Bank (NBG) claims that the current devaluation of the national currency, the lari, is temporary and is caused by false expectations amongst the public that the lari would be devalued in autumn.

As of today, USD 1 costs 2.61 GEL, while €1 is equivalent to 3,03GEL.

“There were high expectations that the lari would lose its price in the autumn despite the fact there were no grounds for this fear. The expectations had an influence on the national currency in the short-term perspective only,” the bank wrote, referring to expectations when people try to buy foreign money as they are afraid of the devaluation of their own currency.

The bank stressed that mid-and-long term factors having an influence on the national currency were positive and the tendency would continue in the next year.

“Based on September data, incomes from solid export and tourism has risen about 30 percent and remittances have increased by 20 percent,” the bank wrote.

The NBG said they were in active communication with the government of Georgia and in the case of any threat of inflation they are ready to use all levers to avoid high inflation.

The same was stated by the government, when the opposition accused the authorities of the wrong economic policy which lead to the national currency’s “rough devaluation” starting from 2014.

The National Statistics Office of Georgia (Geostat) reports that in October 2017, the monthly inflation rate amounted to 0.8 percent.

Compared to the same month of the previous year the Consumer Price Index change (annual inflation rate) posted a 6.4 percent increase.

The agency said the inflation was because of the price changes for food, alcohol, transport fees, healthcare services.