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Georgian Lari And Armenian Dram Recover After Slump

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  • Georgian Lari And Armenian Dram Recover After Slump

    GEORGIAN LARI AND ARMENIAN DRAM RECOVER AFTER SLUMP

    Democracy & Freedom Watch
    Dec 10 2014

    by DFWatch staff | Dec 10, 2014

    TBILISI, DFWatch-The currencies of Georgia and Armenia are recovering
    after a slump of more than 10% in the last few weeks.

    The sight of money exchanges trading US dollars for more than two
    Georgian lari (GEL) set off a fervent debate in Tbilisi.

    Many blamed the government for the fall of the lari, but Financial
    Times published a table which shows that the drop was almost exactly
    matched by a similar downturn in the price of Armenian dram, and
    quoted an analyst who explained the incident as an effect of Russia's
    economy slowing down.

    Prime Minister Irakli Garibashvili on Tuesday blamed the National
    Movement for attempting to create panic, but said there are external
    causes for the lari's fall, such as a strengthening of the US dollar.

    "We must also underline the difficult economic and political situation
    in the region, which has had an important influence on our trade
    balance."

    Georgia has a relatively small economy and the currency is allowed
    to float as investors on the foreign exchange market place bets on
    how the country will perform. The National Bank will intervene only
    in order to maintain a stable inflation rate, with targets set at 6%
    in 2014, and 5% in 2015.

    Georgia and Armenia's currencies have had an almost identical price
    swing in recent weeks. Analyst Timothy Ash in Standard Bank explained
    to the FastFT team that the fall of the lari and dram may have been
    caused by the fall in the Russian economy, which Georgia too has become
    more integrated with, following a recent thaw in economic relations.

    Russia's economic woes may also have led to less money being sent
    home by emigrants from the two countries, so-called remittances,
    he wrote in an analysis.

    Garibashvili said he is confident his country's economic growth will
    surpass 5% this year, referring to a projection by the World Bank.

    http://dfwatch.net/georgian-lari-and-armenian-dram-recover-after-slump-22000

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