While global currencies lose to the dollar, why is Georgia’s ‘Lari’ so strong?｜エジプト社長（Masa Nozaki）
While global currencies lose to the dollar, why is Georgia’s ‘Lari’ so strong?
When looking at currency news, this year again, words like ‘yen depreciation’ and ‘XX currency hits record low’ are all that line up. In the face of a strong dollar, currencies around the world are being pushed back.
However, in Georgia, a small country I have been visiting for over 8 years and where I still help with bank accounts and corporate establishment, the local currency, the ‘Lari (GEL)’, is for some reason quietly but surely strong.
1 dollar is about 2.59 Lari (early November 2026). It has returned to its ‘highest level against the dollar’ since the beginning of 2024. Why can the currency of a small country remain strong in the face of the headwind of a strong dollar? I will talk about the answer I have found from my observations on the ground in a simple way.
■ To begin with, how ‘strong’ is the Lari?
A ‘strong or weak currency’ is a matter of exchange rates compared to other currencies. If the money needed to buy 1 dollar increases, it is ‘weak’; if it decreases, it is ‘strong’. Since the world’s money is first measured in dollars, we look at whether it is strong or weak against the dollar.
The Lari has risen about 4% against the dollar over the past year. Moreover, in the past year, many major emerging market currencies have fallen in the face of a strong dollar. On that same playing field, the Lari has not only not fallen, but is on the side that has risen. I see this as quite rare.
So, why is that? I will talk about the reasons by narrowing them down to four.
■ Reason 1: Citizens have started to ‘give up the dollar and hold the Lari’ on their own
In technical terms, this is ‘Lari-ization’; in simpler terms, it is ‘de-dollarization’.
Until a few years ago, it was common in Georgia for real estate, rent, and large purchases to be denominated in dollars. People trusted the dollar more than their own currency. Now, about 80% (79%) of loans are denominated in Lari, and people have started switching their savings from dollars to Lari.
Everyone wants to hold Lari. That means the ‘power to buy Lari’ is springing up from within the country. It did not rise due to speculative money; the citizens have started to believe in their own currency. Every time I feel this on the ground, I think it has become a completely different country from 8 years ago.
■ Reason 2: Incoming foreign currency has started to exceed outgoing foreign currency
Countries have the same ‘inflow and outflow of wallets’ as households, and looking at them together is the ‘current account balance’. The more foreign currency that comes in, the easier it is for that country’s currency to be bought.
Georgia was long a country where ‘more goes out (deficit)’. Recently, as of the beginning of the year, the deficit from a year ago has shrunk by about half. This is because the inflow of foreign currency has increased.
▼ Specifically, tourists reached 2.81 million in the first half of the year alone (up 4.6% year-on-year), with tourism revenue of about 2 billion dollars. Remittances from Georgians working abroad also account for over 10% of GDP, and the source of remittances has shifted from the previous focus on Russia to countries with ‘hard currencies’ such as the EU and the United States. The re-export of used cars has also grown. These are all supporting the Lari from below.
■ Reason 3: The Central Bank has changed from a ‘seller’ to a ‘buyer’
In 2024, Georgia was shaken by elections, protests, and confusion over EU membership, and to protect its currency, the Central Bank sold dollars to support the Lari. About 900 million dollars annually. Foreign exchange reserves temporarily recorded their largest drop ever.
However, in 2025, the tide turned. From March to November, the Central Bank bought about 2 billion dollars this time. From the selling side to the buying side. As a result, foreign exchange reserves returned to about 7.5 billion dollars by mid-2026, a safe level of about 4.8 months of imports. This disciplined movement is also evaluated by the IMF.
■ Reason 4: Interest rates are high, and debt is low
Georgia’s policy interest rate is 8.25%. Even after subtracting the inflation rate (in the 5% range), it remains on the side of real growth. High interest rates attract investors from around the world who want to hold that currency.
On the other hand, the country’s debt (public debt) is very light, at about 32% of GDP. Countries with heavy debt are tempted to secretly print money to dilute its value, but that pressure is small in Georgia.
■ And above all — this is a currency that has ‘survived political upheaval’
The deciding factor for why I truly trust the Lari is not the numbers.
In 2024, this country was truly shaken. Election chaos, daily protests, the suspension of the EU accession process, and the possibility of sanctions from the West. It was a storm where it would have been no surprise if the currency had plummeted. Yet, the Lari did not collapse, and once the storm passed, it actually returned to a level stronger than before. The IMF described this as ‘remarkable resilience’.
There are many currencies that are strong in peacetime. But there are not many currencies that can survive a crisis and bounce back. When I look at the Lari, that is what I value the most.
■ So, what can we learn?
There is a proper reason for a strong currency. The people believe in their own currency, foreign capital flows in, the central bank maintains discipline, interest rates are high, and debt is low. The strength of the Lari was not a coincidence.
If that is the case, the opposite must also be true. There is a reason for currencies that are becoming weaker. Which side is the currency that makes up the majority of your assets on? Can you answer with confidence?
That is why I believe that instead of leaving everything entrusted to a single currency like the yen, it is important to hold ‘strong currencies’ with sound reasons as part of your portfolio. I believe that such diversification will become increasingly important in the coming era. The Lari is one strong option, but of course, it is not a panacea.
▼ Points to note
・The strength of the Lari also includes the tailwind of a ‘phase where the dollar itself was somewhat weak.’ If the dollar strengthens again, downward pressure could be applied.
・There is also a view that the re-export of used cars, which supported the inflow of foreign currency, is temporary.
・Even if the current account balance improves, it remains in deficit (forecast to be in the 4% range of GDP for the full year of 2026), and its strength is predicated on the continued inflow of foreign currency.
・Geopolitical and institutional risks such as the post-election political situation, relations with the EU, and the possibility of sanctions remain active.
・High interest rates are attractive, but they are two sides of the same coin with the high volatility characteristic of emerging market currencies. I recommend not judging based solely on yield figures.
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