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Koba Gvenetadze: GEL Excessively Strengthened in Spring

GEL/USD rate has been the main topic of the interview, publication “Rezonansi” has talked to the President of National Bank of Georgia. 

President of NBG considered three priorities of the Regulatory in the extensive interview –  tight communication with the media, reduction of dollarization and protection of consumer rights.  Gvenetadze declares, that the key problem in Georgian finance system is the highest rate of dollarization.

“When the matter concerns to dollarization, a question rises, why is it so high? As a rule, dollarization should not be so high in the country, where inflation, bilateral fluctuation of the rate and financial development pace is so low. Georgia is a clear example how difficult is to recover from this diseases”, – President of NBG declares and relates this “diseases” to coupon period in 90-ies, which follows to the country up to now and the sole currency with the function of gathering and payment has been USD. 

“If dollarization rate is low, fluctuation of the rate will be less obvious for the society. Population must get used to live without USD and national currency must become the priority for them. Dedollarization is not simple, we actively work to this direction. There are different mechanisms, for instance in the case of big transaction, including vehicle or real estate sales, the price should be fixed in GEL”, – Gvenetadze explains.

Gvenetadze had responded on GEL rate as well. He said, that big interventions would not be correct in that case.

“National Bank technically can make big interventions and repress the events that affect the devaluation, but it means that negative factors will be gathered further more. We can protect the rate several times, but it does not solve the problem. Finally it will blast and we should get more devaluation and damage”, – Gvenetadze noted with the publication.

He declares, that NBG does not interferes in the balancing of the rate for a short-term period, besides those cases when surplus fluctuation of the rate is not caused by the sole big transaction.