Tbilisi (GBC) – The National Bank of Georgia's net purchases on BMatch amounted to USD 110 million in August.
In January-August of this year, foreign currency reserves of the country were replenished by $1.464 billion with foreign currency purchases on Bloomberg. In September, the bank spent 64.7 million.
The NBG had to sell the currency before September 20, even at the beginning of June. 40 million at the auction. USD was withdrawn and the market absorbed only USD 17.1 million. Then the weighted average exchange rate was 2.6330. At the last auction on September 25, the dollar was sold at the rate of USD 1/GEL 26682.
As stated by the NBG, the central bank engages in interbank trading when the exchange rate ($/GEL) begins to fluctuate, in the direction of depreciation or strengthening. If it moves towards depreciation, the NBG sells the US dollar, if the GEL tends to strengthen, then it buys.
The regulator intervenes in the foreign exchange market in such a way (when it balances, it reduces excess volatility) that the medium and long-term stability of the exchange rate is not threatened.
Excess is noted when there is a large transaction in the market compared to its volume or there is a temporary lack of liquidity.
In addition, the asymmetry of the influence of currency interventions should be taken into account. The intervention is more effective when the GEL is solid.