President of the National Bank of Georgia Discussing Stability of Prices and Exchange Rate with Businessmen
25 Jun '10
Members of the Business Association, representatives of commercial banks and NBG attended the meeting held at Sheraton Metekhi Palace Hotel on June 25.
In his welcoming speech the BAG President Giorgi Chirakadze noted that trilateral dialogue between the business, commercial banks and National Bank on issues such as stability of exchange rate and insurance of currency risks is important for each party to this dialogue.
President of NBG Giorgi Kadagidze delivered a presentation for the public gathered at the meeting. Main subject of the presentation was monetary policy, stability of exchange rate, mechanisms of protection against fluctuating rate and price stability.
Based on the existing macroeconomic trends, according to Kadagidze, this year's economic growth rate is 4.5% with growth potential in agriculture, services and banking sectors.
NBG carries on implementing the so-called "floating" exchange rate policy which means fluctuation of rate in both directions - "We're surprised by fluctuation of the exchange rate in Georgia but looking at other countries' situation, fluctuating rate is absolutely normal. Currency which remains unchanged is very rare. Difference between us and these countries is that they have many financial instruments such as hedging instrument allowing the companies to insure themselves in advance", - added Mr. Kadagidze.
BAG President underlined that the main problem in Georgia in this regard is underdeveloped currency risk insurance instruments. As soon as financial instruments develop it will be much easier for the companies to insure themselves.
As stated by Mr. Kadagidze, stability of GEL is guaranteed in a medium and long term. However, stock-jobbing of market players do contribute to the changing of GEL exchange rate. One of the effective means of preventing it is to have the businesses which are especially vulnerable to fluctuating exchange rate equipped with qualified staff having fundamental understanding of economic processes going on in the country.