The National Bank of Georgia (NBG) has reviewed the current developments in the foreign exchange market.

According to the NBG, the average exchange rate of the Georgian lari against the US dollar dipped slightly in September, from 2.7015 to 2.7067, representing a 0.2% decline. Meanwhile, the average rate against the euro increased from 3.1367 to 3.1740, indicating a 1.2% depreciation.

By the end of the month, the official exchange rate stood at 2.7088 against the US dollar and 3.1739 against the Euro. Throughout the reporting period, the maximum GEL-USD rate was 2.7405, with a minimum of 2.6920.

“In September, the maximum exchange rate deviated more from the average than the minimum did. The Russian ruble experienced a significant depreciation against the dollar during the month. The Turkish lira’s depreciation is evident monthly and annually. The Georgian lari also depreciated slightly compared to the previous month. Conversely, the Armenian dram saw a modest strengthening, while the Euro strengthened noticeably; the Azerbaijani manat remained relatively stable.

The real effective exchange rate of the Georgian lari depreciated by 3.1% annually and by 0.2% month-on-month. High inflation in Turkiye significantly contributes to the depreciation of the GEL’s real effective exchange rate. Regarding the nominal effective exchange rate index, it increased by 0.7% annually and by 0.2% over the month,” the National Bank explained.

Furthermore, the NBG noted that an appreciation of the effective exchange rate can adversely impact the country’s competitiveness, although it can also help reduce import-driven inflation.

“Among trading partners, inflation in September was higher year-on-year in Turkiye, Ukraine, Russia, Belarus, and Azerbaijan compared to Georgia, while it was lower in Armenia, the United States, and the Eurozone. Some key trading partner countries are experiencing a downward trend in inflation; however, overall, price levels remain elevated,” the report concluded.