The National Bank of Georgia (NBG) accelerated the sale of Foreign Exchange (FX) reserves following the turmoil in the financial regulator. In less than a month, NBG intervened five times as a result of which almost USD 150 mln have been sold:
- October 17: NBG makes another intervention, selling USD 40 mln FX.
- October 6: NBG sells USD 44.9 mln out of USD 50 mln, put up for FX Auction.
- September 25: NGB sells USD 7.6 mln out of USD 30 mln FX on Auction.
- September 21: NGB sells USD 37.15 mln out of USD 50 mln FX, offered on Auction.
- September 20: NGB sells USD 20 mln during its FX Auction.
Speaking at a press-briefing the NBG President Natia Turnava explained the USD sales as a way of neutralizing one-off, short-term factors. Among these, she cited “panic-inducing political appeals to the population, telling them that the [Georgian] financial system, the National Bank, seems to have collapsed”. According to Turnava, these false appeals have a negative impact on the financial market and “it is our duty” to neutralise the harmful effect.
The other factor, she said, was large transactions in the market. She noted that in the case of such a large transaction “we don’t want the market to experience a serious shift that essentially doesn’t correspond to the real state of the fundamentals”. She maintained that “the currency market has no fundamental problem”.
On September 19 the National Bank of Georgia issued a statement on amendment to its regulation that would shield Otar Partskhaladze, sanctioned by the U.S. Treasury, from his assets and transactions being targeted in Georgia. This represented the reversal of the decision published a day earlier by the National Bank that it would comply with the international sanctions.
From that day on, the Georgian lari has fallen against the U.S. dollar and the Euro, highlighting the problems with currency stability.
Turnava’s controversial decision led to the prompt resignation of three NBG Vice-Presidents, Papuna Lezhava, Archil Mestvirishvili, and Nikoloz Gagua, followed by the NBG head’s adviser Giorgi Bakradze. In the weeks following the NBG decision, three other managers have also resigned.
Also Read:
- 17/10/2023 – President Revokes Partskhaladze’s Citizenship & Vetoes “Tents Law” Ahead of Impeachment Procedure in Parliament
- 20/09/2023 – Three NBG Vice-Presidents, Advisor Resign
- 20/09/2023 – Georgian Banks Respond to NBG Decision on Partskhaladze
- 19/09/2023 – National Bank Makes U-Turn, Shields Sanctioned Partskaladze
- 18/09/2023 – U.S. Sanctions | Who is Otar Partskhaladze?
