Bank of Georgia CEO - The lari peg to the dollar only is illogical, to the currency basket - ineffective

Bank of Georgia CEO - The lari peg to the dollar only is illogical, to the currency basket - ineffective

access_time2019-05-15 09:55:05

The lari peg to the dollar only is illogical, but to the currency basket it is ineffective and  does not bring the desired results, Archil Gachechiladze, Director General of the Bank of Georgia, says.

Gachechiladze believes the central bank’s  monetary policy which envisages  a floating exchange rate is correct in the current situation, as the lari peg  to foreign currency and fixed rate will not do any good.

“there are two main exchange rates theories -  one provides for a target inflation rate, and Georgia has chosen just   this path. The second is a fixed rate pegged to the currencies of the partner countries. For some reason to the dollar that is impossible and if  a crisis, can bring very difficult results. If we want to fix the rate, then in relation to the currency basket, taking into account such currencies as lira and ruble as  Turkey and Russia are our  main trading partners,. But still there will be fluctuations given instability of  these currencies to the dollar, ”the banker says.


In Gachechiladze’s opinion,   the lari shouldn’t be pegged to the dollar-euro dual currency basket that can cause  large fluctuations in the trade competitiveness with major partners.

“This can ruin a business- the lari peg to  the dollar is unrealistic, and to the basket will not bring what we expect – the rate stability,” CEO at Bank of Georgia points out.


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