Economists associate drop of lari with negative expectations and stronger dollar

The exchange rate of the Georgian lari against the US dollar has been steadily dropping since the start of the week; while on October 27 the lari/euro exchange rate fell below the historical minimum. Economists link the lari weakening with the end of the tourist season, post-election recession of economic activities and the trend that has forced people to expect for the lari devaluation this autumn.

On October 27, the lari/euro exchange rate renewed the historical minimum – the National Bank of Georgia fixed the cost of one euro at 3.01 laris. The US dollar rate continues gradually increasing, and on October 27, according to the National Bank, one US dollar cost was 2.55 laris.

The drop of the lari is due solely to external factors - in particular, the strengthening of the US dollar against all other currencies, said Mikhail Tokmazishvili, a former board member of the National Bank of Georgia.

Besik Namchavadze, the chief economist of the NGO "Association of Georgian Reforms", believes that indirectly the lari's exchange rate was affected by the local elections held on October 21; since "large economic activities" were observed before the elections. Besides, the national currency has reacted to the end of the tourist season and a seasonal increase in imports in October-November.

"For the third or the fourth consecutive year, the lari begins its depreciation in November, and the population starts reacting to this; this expectation could also impact the lari exchange rate," Mr Namchavadze said on air of the "Rustavi-2" TV.

Full text of the article is available on the Russian page of 24/7 Internet agency ‘Caucasian Knot’.