Fitch Ratings: “We Expect the Lari to Remain Broadly Stable”
The Georgian lari is expected to maintain overall stability, according to Arvind Ramakrishnan, Head of the Analytical Team at Fitch Ratings. In an interview with BMG, Ramakrishnan outlined the key factors supporting the currency’s resilience despite significant foreign exchange market activity.
“We expect the lari to remain broadly stable,” he said.
Ramakrishnan noted that although the National Bank of Georgia (NBG) has purchased around $1.5 billion in foreign currency this year, the lari has remained firm due to several contributing factors.
First, he emphasized the role of strong cash inflows into the Georgian economy. Second, he pointed to technical conditions, such as the rules governing foreign currency purchases on the BMatch platform, which prohibit the NBG from buying currency when the trend suggests depreciation.
Additionally, the steady decline in deposit dollarization has released more foreign currency into the banking system, easing market pressure.
Ramakrishnan also mentioned an external factor that has indirectly supported the lari:
“This is not directly related to macroeconomic fundamentals, but the weak U.S. dollar has also contributed to strengthening the lari in recent times,” he explained.
He underscored the importance of exchange rate stability for Georgia’s financial health, noting that approximately 70% of the country’s debt is denominated in foreign currency. Fluctuations in the lari therefore have a significant impact on Georgia’s credit dynamics and overall economic stability.
