Feb 1, 2019

NBG bought 85 mln USD in January 2019

Quick Update

  • In January 2019 the National Bank of Georgia intervened 6 times on the FX market and purchased 85 mln USD in total, an estimated 8% of monthly GDP.
  • In 2018 NBG made 17 interventions and purchased 197.5 mln USD – an estimated 1.2% of GDP.
  • Lower limit for net international reserves of NBG is defined at 1.456 bn USD as of June 2019 in the program agreement with the IMF. This lower threshold is likely to be already met given the sizeable FX interventions in January 2019.
  • NBG introduced new tool for FX interventions - GEL call options, which are sold by the central bank with the pre-defined schedule. The NBG will sell GEL call options to commercial banks with the right to buy 50 mln GEL each month over the coming 12 months. Banks are able to exercise call options whenever GEL/USD exchange rate appreciates above the moving average for the last 20 days.
  • According to the NBG, this allows the central bank to replenish the international reserves and at the same time make the interventions more predictable, minimizing the impact on the exchange rate.