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,
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.