Natia Turnava: “The inflow of foreign currency has caused GEL to appreciate.”
Verdict: FactCheck concludes that Natia Turnava’s statement is MOSTLY FALSE.
GEL appreciated against USD by GEL 0.0362 in the first days of March and by GEL 0.0396 as compared to the beginning of the year. However, in contrast to USD, GEL depreciated against EUR by GEL 0.0679 and GEL 0.0889, respectively, and by GEL 0.0213 and GEL 0.0619 against GBP. Furthermore, GEL has weakened against almost all other European currencies, including the Swiss franc (CHF), the Polish zloty (PLN), the Bulgarian lev (BGN), the Romanian leu (RON), the Swedish krona (SEK) and the Norwegian krone (NOK).
USD itself has depreciated against most other major currencies (EUR, GBP, JPY) in the last two months. The US dollar index has also deteriorated. Consequently, the primary reason for the appreciation of GEL against USD was the depreciation of the dollar. The dollar index has decreased by higher than 4%, whilst GEL has appreciated against USD by only 1.4%.
GEL has indeed appreciated against some international currencies, such as the Chinese yuan (CNY) and the Canadian dollar (CDN), as well as the currencies of neighbouring countries with the exception of the Russian rouble (RUB) which can largely be attributed to the depreciation of these currencies themselves.
Incomplete statistical information is available regarding how the inflow of currency has changed in the last ten days or the past two months which is insufficient for drawing a definitive conclusion. The available facts confirm that USD depreciated during the reporting period. Considering that the primary – or at least one of the main – reasons have been overlooked, FactCheck concludes that Natia Turnava’s statement is MOSTLY FALSE.
Analysis
President of the National Bank of Georgia (NBG), Natia Turnava stated: “There are good, strong inflows of foreign exchange into the country. That is why GEL has appreciated.”
Georgia operates a floating exchange rate regime. The NBG sets the official exchange rate based on trading between banks on the Bloomberg platform. Whilst the NBG has the mechanisms to influence the exchange rate, it does not participate in the formation of the rate at the time of its announcement, instead reflecting the existing market reality.
The real exchange rate is influenced by both fundamental and short-term factors. Fundamental factors refer to long-term cash flow dynamics, such as foreign trade, foreign direct investment, tourism revenue and remittances. Short-term factors are mainly driven by expectations, which typically arise from ongoing processes or specific decisions.
Natia Turnava did not specify a particular date against which GEL strengthened. The official exchange rate against USD was GEL 2.82 on 28 February and GEL 2.78 on 10 March, at the time of the statement, indicating an appreciation of GEL 0.04, or more precisely, GEL 0.0362 over the ten days. In contrast to USD, GEL depreciated by GEL 0.0671 against EUR and by GEL 0.0213 against GBP during the same period. Additionally, GEL depreciated against the Swiss franc (CHF), Bulgarian lev (BGN), Danish krone (DKK), Polish zloty (PLN), Czech koruna (CZK), Norwegian krone (NOK) and other European currencies.
GEL appreciated against all the currencies of neighbouring countries in the first ten days of March: against 100 Russian roubles (RUB) by GEL 0.1153, against 1,000 Armenian drams (AMD) by GEL 0.0974, against the Azerbaijani manat (AZN) by GEL 0.0211 and against the Turkish lira (TRY) by GEL 0.011.
GEL has appreciated by GEL 0.0392 against USD when taking 1 January as the reference point. However, GEL has depreciated against most other major currencies in this case as well, including EUR, GBP and CHF.
GEL has strengthened only against USD, the Hong Kong dollar (HKD), the Canadian dollar (CDN) and the Chinese yuan (CNY) amongst major international and European currencies (whilst the Australian and New Zealand dollars, AUD and NZD, respectively, are also amongst the ten most-used currencies, Georgia’s total annual trade turnover with these two countries is less than USD 6 million).
Table 1: Official Exchange Rate of GEL against the Currencies of International and Some European Countries
Source: National Bank of Georgia
GEL has depreciated against RUB since the beginning of the year, whilst it has strengthened against the rest of the currencies of neighbouring countries. Furthermore, it has depreciated against the Kazakh tenge (KZT) but has appreciated against the Kyrgyz som (KGS), amongst the currencies of other major trading partners. The sharp 20% depreciation against RUB is due to the rouble’s own appreciation. USD exceeded RUB 100, occasionally surpassing RUB 110, in November-December last year and early January 2025; however, it had fallen to RUB 87 by March.
Table 2: Official Exchange Rate of GEL against the Currencies of Neighbouring and Other Primary Trade Partner Countries
Source: National Bank of Georgia
Only foreign trade and remittance data for January-February are available as of 13 March. Whilst exports increased in January, they declined in February. Remittances also saw a decrease. Information on tourism revenues and foreign direct investment remains unknown, making it impossible for FactCheck to determine the net change in cash flows during the aforementioned period. However, it is possible to analyse why GEL has appreciated against USD whilst depreciating against most other international currencies.
USD has depreciated against most global currencies over the past two months. Notably, EUR 1 was worth USD 1.04 at the start of the year, whereas today it is equivalent to USD 1.09. GBP has risen from USD 1.25 to USD 1.29 and CHF from USD 1.11 to USD 1.13.
The US dollar index – a weighted geometric index measuring the dollar’s value against the currencies of the US’s key global economic partners – also reflects this trend beyond individual exchange rates.
The dollar index measures the value of USD against six major world currencies: EUR, GBP, CHF, SEK, JPY and CDN, with the euro holding the largest weight at 57.6%. Whilst the index stood at 108.5 at the beginning of the year, it had declined to 103.8 by 10 March, at the time of Natia Turnava’s statement.
With the dollar index declining by over 4%, GEL appreciated against USD by only 1.4%, depreciating against most other major international and European currencies. This indicates that the primary driver of the appreciation of GEL against USD was the dollar’s own depreciation.
Natia Turnava attributed the appreciation of GEL to increased foreign currency inflows, without acknowledging the broader depreciation of USD. Given that the depreciation of USD was the primary – or at least one of the main – reasons behind the GEL appreciation, FactCheck concludes that Natia Turnava’s statement is MOSTLY FALSE.
