Experts expect the Georgian lari to continue appreciating at least until the end of the year, if some unexpected event does not occur. This opinion is based on the opening of the economy after the coronavirus breakout.
“The Georgian lari has appreciated by 10%, which is rare in the recent history of Georgia. I expect this trend to continue at least until the end of this year. It is related to the international financial aid Georgia has been given,” said Economic Expert Vakhtang Charaia.
He also noted the reduction of Georgia’s import dependence as one of the factors behind the lari’s appreciation, as well as the decrease of demand for the US dollar as a result of losing jobs amid the coronavirus epidemic and the decline in savings in foreign currency.
Financial expert Giorgi Tsutskiridze expects the lari to appreciate, noting the importance of expectations with other factors.
“Panic has a negative effect on the lari even when the economic indices are positive. We have quite a small market and in case of panic individuals as well as legal entities start buying the US dollar to make reserves expecting the lari depreciation, especially at the end of the tourist season when foreign currency inflows are expected to decline,” said Tsutskiridze.
He noted that now expectations were positive instead of negative and that made lari to appreciate. He said that these expectations were related to the opening Georgian economy after the coronavirus crisis.
“Opening the economy is a very important factor for legal entities as well as for individuals. Legal entities are hoping the turnover to increase and expect to compensate for the loss gained while the economic activities were interrupted,” said Tsutskiridze.
Legal entities now had no fear and were not starting to buy US dollars as a result of panic, instead they were selling US dollars.
Tsutskiridze noted the importance of the $3 billion in international financial aid Georgia received amid the coronavirus crisis and the anti-crisis plan of the Georgian government in the process of creating positive expectations.
Tsutskiridze expects increased demand on foreign currency after opening the economy but claims that receiving international financial aid will prevent the market from experiencing a deficit of foreign currency. (Agenda/Business World Magazine)