...

Depreciation of Georgian REER associates with domestic export goods gaining competitiveness

Business Materials 27 January 2021 17:59
Depreciation of Georgian REER associates with domestic export goods gaining competitiveness

BAKU, Azerbaijan, Jan.27

By Tamilla Mammadova – Trend:

In November, the Georgian lari real exchange rate sharply depreciated in both monthly and yearly terms against all main trading currencies, Trend reports via the ISET-PI, a think-tank based at the International School of Economics of Tbilisi State University.

The Real Effective Exchange Rate (REER) depreciated by 2.8 percent relative to the previous months, and also by 2.8 percent, relative to the same month of the previous year.

Notably, the lari real exchange rate depreciated with respect to the euro and the USD by 2 percent and 1.8 percent respectively in monthly and by 12.7 percent and 8 percent respectively in yearly terms.

REER depreciated with respect to the two major trading partners – Turkey and Russia by 3.5 percent and 3.4 percent respectively in monthly terms and appreciated by 13.5 percent and 7.5 percent in yearly terms.

It is also notable that from November through December of 2020 National Bank of Georgia (NBG) sold about $223.6 million in foreign currency reserves ($173.8 million in November and $49.8 million in December).

Depreciation of the REER is associated with domestic export goods gaining competitiveness on the foreign markets, but it also translates into increased prices on imported goods. Overall, REER-related variables had a small negative contribution to the real GDP growth projections.

---

Follow the author on Twitter: @Mila61979356

Tags:
Latest

Latest