(Adds new rate, analyst's comment)
By Margarita Antidze
TBILISI Dec 1 Georgia's central bank expects
the lari currency to stop losing value soon, it said on
Thursday, urging people to avoid what it called "harsh
decisions" as many sought to buy foreign currencies.
The lari's official rate hit an all-time low of 2.5871 to
the dollar on Friday, down from 2.5352 on Thursday, while in
commercial banks and exchange booths in the former Soviet
republic the lari has been trading at 2.59-2.63.
It has been weakened by a plunge in the Russian rouble.
Official data shows gross domestic product growth slowed to 1.3
percent year-on-year in October from 3 percent in the same month
a year ago.
"We expect that devaluation will stop shortly," the bank
said in a statement.
It attributed the lari devaluation mainly to the U.S. dollar
strengthening and strong local demand for foreign currency.
"We would recommend society and economic agents not to make
harsh decisions, which will negatively affect themselves," the
Commercial banks and exchange booths in the capital Tbilisi
had been selling foreign currency with no limits on Thursday,
although some customers complained of problems.
"I wanted to buy $1,000 couple of days ago and could not
after visiting several exchange booths," Tbilisi resident Tamar
Maisuradze, 37, told Reuters.
Although the lari has stabilised since April and remittances
from those working outside the country are rising, Georgia's
currency began to depreciate again in September.
The current account deficit rose by 47 percent year-on-year
in January-October to $6.555 billion.
Prime Minister Georgy Kvirikashvili said on Tuesday that the
government planned steps including taking some of the burden off
individuals repaying dollar mortgages and banning online credit
The measures, which are still under discussion, include
fixing the exchange rate for individuals repaying mortgages in
dollars 20 points lower than the market rate, with the
difference to be subsidised by the government.
Analysts said that might add to doubts about the lari.
"The government sounds quite prepared to use a heavy-handed
approach," Giga Bedineishvili, an independent analyst, told
"People can even see some type of currency controls, maybe
even limits to (the lari's) floating regime, which will affect
lari very negatively."
The central bank kept its key refinancing rate unchanged at
6.5 percent on Oct. 26 and is due to hold its next monetary
policy meeting on Dec. 14.
Official data showed inflation at minus 0.2 percent
year-on-year in October, from 5.8 percent the same month a year
ago. The government set a 5 percent target for 2016.
(Editing by Toby Chopra and Ruth Pitchford)