Some economists believe that unless Georgia resolves its relations with the West and gets answers to questions about the election results, the lari will keep falling.
According to director of the Deep Structural Reforms Center, the national currency is significantly affected by the country's foreign policy and investor sentiment. Thus, David Maisuradze believes if the current processes continue, the lari’s further fluctuations are inevitable.
Against this background, the National Bank will not be able to continue to endlessly spend reserves to stabilize the lari exchange rate.
"Any potential sanctions and statements that Western countries are breaking off relations with us will have a negative impact on the exchange rate. The national currency exchange rate is tied to foreign policy which change causes the national currency’s devaluation.
The National Bank's currency reserves are not inexhaustible, and some time later the National Bank will have to stop selling additional reserves to prop up the lari. If election violations are not investigated, relations with the West are not restored, then fluctuations are inevitable," David Maisuradze points out.
As a reminder, in October, the National Bank of Georgia carried out unprecedented foreign exchange interventions in the amount of $ 213 million.
Amid the mentioned interventions, Georgia’s forex reserves dropped to at least $4.5 billion.
