Georgia central bank to sell dollars, may tighten policy as lari hits record low

TBILISI: Georgia's central bank said on Wednesday it will sell $40 million on the market on Thursday and may tighten monetary policy to cut inflationary risks, as the country's currency hit an all-time low against the dollar.

It said the exchange rate has reached a benchmark "that may jeopardize price stability" after the lari fell to 2.9718 to the greenback, adding that it might intervene again on the currency market in coming days.

Tourism was hit after Russia suspended flights to Georgia on July 8 and said it was tightening controls on Georgian wine imports amid anti-Russian protests in the country.

The government expects economic growth this year of at least 5%, though central bank governor Koba Gvenetadze told Reuters this month the dispute might cut that by more than one percentage point.

Meanwhile inflation looks likely to exceed the bank's target of 3% this year. Annual inflation in June stood at 4.3%, up from 2.2% in June 2018, but down from 4.7% in the preceding month.

The central bank kept its refinancing rate unchanged at 6.5% last week. It holds its next policy meeting on Sept. 4.