Georgia and Armenia in the Caucasus and Tajikistan in Central Asia are among the best performers against the US dollar after tens of thousands of Russian citizens settled there since February, bringing with them billions of dollars in savings.
The small countries are attractive havens as no travel visas are required, Russian is widely spoken and there are no restrictions on transferring savings to local banks.
That has pushed Armenia’s dram up more than 22% against the dollar, the top-performing global currency, since the start of the year, data compiled by Bloomberg shows. The Georgian lari and Tajik somoni are more than 16% and 10% stronger, respectively, beating gains in the Russian ruble, which has ceased to be a freely traded currency since emergency capital controls undermined its collapse.
The war explains the five-fold increase in remittances coming into Georgia from Russia so far this year, accounting for more than 60% of all remittances and exceeding $1.75 billion, according to the National Bank of Georgia. Remittances to Armenia totaled $2.8 billion in the first 10 months, nearly quadrupling compared to the same period in 2021. In October, they reached the highest level since at least 2004, the Central Bank of Armenia said.
At the same time, the currency impact of the waves of Russian arrivals is greater in the smaller ex-republics. Kazakhstan, whose population of 19 million is about six times that of Armenia and Georgia, has also received Russian inflows – but the tenge is on track to end the year down 7.5% against the dollar.
Economic gains were not to be taken for granted early in the war, and it was expected that Russia’s neighbors would suffer if their largest trading partner collapsed under international sanctions. In reality, the huge capital inflows have increased their foreign exchange reserves and improved their current account balance. Armenia’s economy grew at double-digit rates in the second and third quarters, while Georgia’s economy grew nearly 10% in the three months to September.
For Tajikistan, remittances rose by at least 50% in the first half of the year, said Natalia Lavrova of BCS Financial Group, citing balance of payments data. That has put the landlocked country’s economy on track to grow 7% this year, compared to previous forecasts of 4-5%, she said.
The International Monetary Fund raised its forecast for full-year economic growth in Georgia to 10%, citing “a war-triggered surge in immigration and financial inflows.” Meanwhile, the Central Bank of Armenia raised its GDP growth forecast to 13% from 4.9% on the back of an influx of Russians, local media reported, citing Governor Martin Galstyan.
Source link: https://canadatoday.news/ca/russias-war-makes-neighboring-currencies-the-best-in-the-world-196473/
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One US dollar trades at GEL 2.7160
11/07/2025
