Georgia's central bank chief said on Tuesday he did not expect the lari to come under further pressure after the bank sold $29.96 million to support the national currency. Georgy Kadagidze told Reuters by telephone minutes after the currency auction that "inflationary expectations are a big challenge now", adding: "Our monetary policy will be equal to these challenges." The lari was trading at 2.4086 per dollar on Tuesday, up from 2.4499 on Monday but much weaker from 1.75 in early November 2014.
Georgia's economy has been battered by weakness in Russia's rouble and fighting in Ukraine, along with declining exports and remittances from abroad and a rising current account deficit. The former Soviet republic's foreign exchange reserves have fallen by $236 million since the beginning of this year after being used to bolster the weakening currency and for foreign debt repayments. They stood at $2.463 billion as of September 1. The central bank has raised its base interest several times this year and Kadagidze told Reuters in August he expected the refinancing rate to be raised to 6.5 percent by year-end.
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