Periodic fluctuation of the GEL rate

The national currency has fluctuated significantly over the past month. On January 28 the highest lari exchange rate for the last 3 years was recorded, GEL 1.7479 to the dollar. Although the dollar continued to fall against the lari for the next few days it began to rise again and by February 23, 1 USD equaled GEL 1.7398.

According to some analysts this change has been caused by a strengthening of the dollar. Emzar Jgerenaia believes that a “crawling increase” of the dollar against the lari will continue throughout 2010. Others suggest however that the strengthening of the dollar in the world markets is not the only reason for the lari's fall against it. Avto Silagadze states that one of the primary reasons for the GEL weakening is that Georgia produces very little and depends mostly on imports. Another reason is the decrease in foreign direct investments and money transfers from abroad.

Some politicians and analysts state that having sharp fluctuations of the currency is a good way for some people to make money. The Movement for Fair Georgia says that currency fluctuations are caused artificially and some groups make “huge” profits out of manipulating the national currency. The Government “closes its eyes” to this because it is using money gained in this way to fund its election campaign, the Movement for Fair Georgia suggests.

The devaluation of the lari against the dollar, and consequently an increase of prices in Georgia, will continue. This causes public concern. It seems that this will become one of the main issues in the upcoming elections.