Tbilisi (GBC) – GEL strengthens GEL, - TBC’s Chief Economist explains strengthening of the national currency with positive expectations, which is conditioned due to the upward trend of GEL rate for the last several weeks.

According to Otar Nadaraia, TBC Capital rules out a change in the spring inflation forecast unless the Ukraine issue escalates or the process of global strengthening of the US dollar does not begin.Tbilisi (GBC) – GEL strengthens GEL, - TBC’s Chief Economist explains strengthening of the national currency with positive expectations, which is conditioned due to the upward trend of GEL rate for the last several weeks.

Nadaraia's mood is driven by inflationary expectations. Annual inflation is double digit and reaches 14%, although it remains within 4% m-o-m, as well as it will be below the targeted rate (3%) of the previous months.

The stable condition of the GEL is conditioned by the increase of foreign exchange inflows, as well as the tightened monetary policy (MP), which restrains the growth of inflation expectations. At the same time, foreign currency loans are tightened so as not to affect the effectiveness of the MP.

In December, exports increased by 29% annually. And an increase of 6% compared to the corresponding period of 2019. Revenues from international tourism increased by about 9 times annually in December, although the decrease compared to the level of December 2019 is still significant (42 percent).

GEL has strengthened against USD by 2.6% since January.