NBG Sells More US Dollars in One Month than in 2023

The National Bank of Georgia sold more US dollars from May 16 to June 11 than in the whole year of 2023 in an attempt to stabilize the exchange rate of GEL, which has experienced devaluation since the adoption of the Law on Foreign Agents in the third reading on May 14. In total, NBG has already sold USD 168.7 million in just one month, while over the last year it sold 1.2% less – USD 166.75 million.

NBG first sold USD 60 million on May 16, then put for sale another USD 60 million on May 28, but sold only USD 48.7 million, and finally sold another USD 60 million on June 11. During this period, the exchange rate of the GEL depreciated: for example, on May 9, 1 U.S. dollar was worth 2.65 Georgian Lari, in just 6 days it reached GEL 2.8150 on May 15. After the first auction it fell back to 2.65. As for the Euro-GEL exchange rate, it changed from GEL 2.8565 on May 9 to GEL 3.0133 on May 15.

In all the cases of auctioning the money, NBG wrote that “the aim of this intervention is to reduce the potential negative impact on market expectations of large one-off transactions.” The former president of the NBG, now a Euro-optimist MP, Roman Gotsiridze, linked the NBG’s decisions to the controversial Foreign Agents Law.

“The “Russian law” had a strong impact on the exchange rate of the GEL, and in order to prevent its sharp devaluation, the National Bank had to sell USD 168 million last month… In such a situation, the National Bank behaves inadequately. While the GEL is threatening to depreciate and prices are rising, the so-called cheap money policy has returned. First, it [NBG] lowered the refinancing rate again, then it granted a large amount of refinancing loans to commercial banks: on May 30, GEL 3.8 billion (historical maximum), on June 6, GEL 3.7 billion… The National Bank is clearly engaged in contradictory manipulations. Meanwhile, the National Bank’s foreign exchange reserves fell from USD 5.2 billion to USD 4.5 billion, which is far below the adequate limit,” – stated Gotsiridze.

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