Comments on alarming GEL devaluation
31 July, 2019
Comments on alarming GEL devaluation
The National Bank of Georgia set a new exchange rate, according to which, dollar price became GEL 2.9507 on Tuesday. Starting with today, 1 USD will cost GEL 2.9507, while the previous rate was GEL 2.9346. As for the euro, its exchange rate is GEL 3.2889, while the previous rate was GEL 3.2642.

NBG President says GEL devaluation is caused by external shocks and reduction of tourist flow

According to the President of the National Bank, Koba Gvenetadze,
the devaluation of the national currency is caused by external shocks and reduction of tourist flow in the country.

“Today Georgia is going through an external shock. Expected number of inflows has been reduced in Georgia. It is clear according to figures that fewer tourists come to Georgia. This, of course, affects the exchange rate. Of course, this is a very painful process, I absolutely understand everyone who is affected by it”, Gvenetadze said.

However, according to the President of the National Bank, if they see that the exchange rate results in inflation, the National Bank will use all the tools at its disposal.

PM Bakhtadze: Gel’s depreciation is too high

Any analysis shows that the fundamental factors are quite strong today, and therefore, the Gel’s depreciation is too high,- Georgian Prime Minister Mamuka Bakhtadze told reporters on Tuesday evening.

The head of government noted that in May and June of this year Georgia received the highest tourism revenue in its history and there was an expectation to mobilize more revenue from the tourism sector in the economy, which could not be achieved due to recent developments in the country.

“There was an expectation in the economy that more revenues would be mobilized from the tourism sector. Unfortunately, due to the recent events, it did not happen, but of course, this is not an only factor. It’s important to underline that there are quite strong fundamental factors today and therefore, the Gel’s depreciation is too high. This is the conclusion of experts. The National Bank has also made explanations. Naturally, it is an independent body that has its own opinion – own unbiased opinion. Of course, it is important for the National Bank to control the inflation rate and must interfere when the parameters are changed. Naturally, I have this expectation and the National Bank has confirmed it. We are open to communication as much as possible, we meet business every day. We will talk about it tomorrow, the day after tomorrow. There is a problem – the tourism revenues have fallen, but I am sure that with the action plan presented, with the suggestions we have heard from the business, we will be able to overcome these problems, "the Prime Minister said.

Ex-minister of the economy : GEL may continue to depreciate further if the situation is not balanced

GEL may continue to depreciate further if the situation is not balanced, - ex-minister of economy Giorgi Kobulia told “PalitraNews” TV program “360 Degrees”.

According to him, one of the main factors of the depreciation of the GEL is an aggravation of the conflict situation with Russia and the reduction of the number of tourists in the country.

“All the measures that the government will take now is, in fact, defrauding. There is not the measure that will immediately compensate for the loss we have suffered. Today, we see two major factors of the depreciation of the GEL: aggravation of the conflict situation with Russia and the reduction of the number of tourists in the country. Also, this event has also caused great damage to the neighboring sectors. The worsened situation scared off investors and the number of the investors who invested in foreign currency in Georgia has been declined, ”Kobulia said adding that there is the risk Georgia to lose more than one and a half million high solvent tourists from Russia.

Temur Chkonia: The Gel’s exchange rate is in a catastrophic situation

The Gel’s exchange rate is in a catastrophic situation, - businessman Temur Chkonia said in his interview with “Kviris Palitra” newspaper. He slams the statement of the President of the National Bank related to this problem. Chkonia said Koba Gvenetadze’s remark that there is a “free exchange rate in the country" means that the national currency is “abandoned freely.”

“Gel’s exchange rate is in a catastrophic situation. It can be said that our national currency and its exchange rate are the faces of the country's current economy. However, the Gel and its stability determine the stability of the economy. The remarks of the National Bank’s president that there is a free exchange rate in the country means that the national currency is abandoned freely. The free, floating exchange rate has other economic loading and does not mean that it should be left to their own devices,” Temur Chkonia said.

He also talked about the impact of the depreciation of Gel’s rate on business. According to Temur Chkonia, it is impossible to talk about progress and development when the businessmen are oriented to avoid bankruptcy and to get out of the crisis.

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