The National Bank of Georgia on May 23 determined the Georgian national currency at 2.8767 per USD for the next day’s trading, as GEL continues to appreciate and slowly approach its pre-pandemic levels.
With the new rate, GEL has strengthened against the USD by 15% from the year’s weakest rate of 3.4019 on March 10, in the early days of Russia’s brutal invasion of Ukraine, the news of which had immediately sent the Lari tumbling. MORE
The Georgian Lari had largely fluctuated above the rate of 3 per USD since the onset of the COVID-19 pandemic, after it dropped to its all-time weakest rate of 3.4842 per U.S. dollar in March 2020.
The marked appreciation now comes as Georgia recorded the all-time highest amount of remittance inflows in April 2022 since at least 2000.
Data from the National Bank of Georgia showed that the gross inflow of money transfers into Georgia came in at USD 308.1 million in April, up by 58.8% year-over-year from USD 194.1 million in April 2021, and by 59.6% month-over-month from USD 193.1 million in March 2022.
Much of the increase was due to a rise in transfers from Russia, which came in at USD 133 million in April, up by 299% y/y from USD 33.3 million and by 392% m/m from USD 27 million.
Russia's contribution in the year-over-year and month-over-month increases were 87.3% and 92.1%, respectively.
Lasha Kavtaradze, Head of Macroeconomic Analysis and Forecasting at Galt & Taggart, the investment arm of Bank of Georgia, one of the largest local financial institutions, has said that besides the growth in remittances, a rise in tourism and exports revenues are behind the recent strengthening trend of the GEL.
But the economist warned it was unlikely for the positive trend to continue through the end of the year. "The risks and uncertainties are high, a slight depreciation cannot be ruled out by the end of the year," he said in a May 18 report by Formula TV.
Giorgi Kepuladze, Chair of Society and Banks, a nonprofit, argued in the same report that the central bank's hiked policy rate of 11% -- at a 14-year-high -- could be another reason for the GEL's recent trend.
The hike in remittances from Russia coincides with the influx of Russians moving to Georgia amid the fallout of the sanctions over the war in Ukraine.
Amid growing concerns over the Russian influx, Interior Minister Vakhtang Gomelauri said on March 17 that since February 24, 30,439 Russian nationals had arrived in Georgia, of which 17,801 left and 12,638 stayed.
The number of those that stayed behind was fourteen times higher compared to corresponding data from 2019 -- before the pandemic disrupted travels -- when 64,008 Russians entered Georgia, while 63,097 left and 911 stayed.