Statement of the Acting President of the National Bank of Georgia, David Amaglobeli on the Adjustment of the Lari Exchange Rate

Statement of the Acting President of the National Bank of Georgia, David Amaglobeli on the Adjustment of the Lari Exchange Rate

10 November, 2008

A briefing was held at the National Bank of Georgia, during which the acting president of the National Bank of Georgia made a statement on the recent adjustments to the Lari exchange rate.

David Amaglobeli stated that, "The correction in the exchange rate was dictated by economic considerations. The most suitable time was chosen for this action. Currently, the exchange rate has reached an equilibrium point and does not require additional adjustment.  The National Bank of Georgia will maintain existing exchange rate policy.  Accordingly, interventions on the foreign exchange market will continue and the stability of the exchange rate will be maintained, for which the National Bank of Georgia has sufficient reserves. Moreover, in the long term Lari depreciation has no economic foundation."

Amaglobeli also noted: "This adjustment will not have a significant negative effect on inflation, because there is no economic basis for an increase in prices.  A few retailers may try to take advantage of the current situation and increase prices, even though there is no real reason for doing this.  After the exchange rate adjustment the Lari rate vis-à-vis the basket of currencies of the main trade partners is unchanged relative to its level three months ago.  Additionally, note that the main objective of the National Bank of Georgia is to maintain price stability and the Bank has sufficient resources and instruments to achieve this objective."

The restoration of exchange rate equilibrium will aid economic growth and make the economy more competitive.