Natia Turnava: Strong Inflows and Market Confidence Support Growth in Reserves and Larization
"The current situation on the market allows us to say that we have a fairly strong inflow, which is reflected in the growth of reserves," said Natia Turnava, President of the National Bank of Georgia (NBG).
Turnava emphasized that while replenishing reserves is crucial, the NBG continues to monitor market conditions closely. Based on available data from May, the main sources of foreign currency inflow remain exports and remittances, which have shown significant growth.
"Remittances increased by approximately 12%, and exports grew by 15.7%. Notably, local exports—excluding re-exports—rose by more than 10%, which is an encouraging trend," she stated.
According to Turnava, the ongoing larization trend is also contributing to the stability of the Georgian lari. Deposits, especially those held by legal entities, are increasingly being converted into the national currency.
"During a period of uncertainty, many purchased U.S. dollars, but we are now seeing those reserves being liquidated. Deposits are being de-dollarized. The share of lari-denominated deposits has increased by about 1.2%, reaching near parity with foreign currency deposits. Compared to 15 years ago—when over 75% of deposits were in foreign currencies—this marks a significant shift," Turnava noted.
She added that macroeconomic stability, alongside NBG’s interventions, helped minimize the impact of recent market uncertainty.
“It was a short-lived period of volatility. Our interventions played a role, but overall market confidence and macroeconomic resilience helped stabilize the lari. This has increased trust in the local currency and contributed to larization—one of the key sources of dollar supply in the market. We're clearly benefiting from this trend," she explained.
Turnava further highlighted that reserve accumulation and usage is a natural and necessary process, serving to meet external debt obligations.
“Our aim is to ensure net positive reserve accumulation with a consistent growth trend. Interestingly, this period is unusual—even rare. Neither I nor my colleagues recall a time when the NBG was replenishing reserves while commercial banks were also purchasing dollars for dividend payouts,” Turnava said.
She added that despite this activity, the foreign exchange market remained stable, and the NBG did not need to halt operations.
“Dividend-related dollar purchases took place without significant market disruption, and we did not stop our reserve accumulation efforts during this period. This reflects the strength and resilience of the current market environment,” Turnava concluded.
