TBILISI, May 16 (Reuters) - Georgia's central bank said on Thursday it had made a $60 million intervention to support the Lari after a surge in demand for foreign currency.

Georgia has been mired in a political crisis over a bill on "foreign agents" passed by parliament on Tuesday, which critics say is authoritarian and Kremlin-inspired. A senior U.S. diplomat suggested that day that Washington might sanction some Georgian officials if it ultimately becomes law.

On Wednesday, the Lari lost 4.9% against the dollar to trade at 2.78, an almost two year low, before paring losses to end the session up 0.65%. As of 1200 GMT on Thursday, the Lari had shed 3% on the previous day, threatening its worst daily performance since March 2020.

In a statement, the National Bank of Georgia said the decision to intervene was taken amid "excess demand for currency, which created additional pressure on the exchange rate of the Georgian Lari".

It said that the decision to provide liquidity had been made due to "agitated processes that have developed in the currency market in recent days", but that Georgia's economic fundamentals remained healthy.

Georgia has been grappling with a political crisis for more than a month, since the country's ruling party said it would reintroduce a bill on "foreign agents" it dropped last year after major protests.

The bill would require organisations receiving more than 20% of their funds from abroad to register as agents of foreign influence, or face punitive fines, and has sparked a rolling series of mass demonstrations and drawn condemnation from the West.

The draft law, which critics compare to Russian legislation used to crack down on opponents of Vladimir Putin, has come to be seen as a test of whether Georgia will retain its traditional pro-Western foreign policy, or pivot back to Russia, from which it gained independence in 1991.

Georgian Dream's founder, ex-prime minister Bidzina Ivanishvili, says that the law is necessary to assert Georgian sovereignty against Western powers which he said wanted to drag the country into a confrontation with Russia.

On Tuesday, U.S. Assistant Secretary of State James O'Brien said during a visit to Tbilisi that Washington could impose financial and travel restrictions unless the bill underwent change or if security forces forcibly broke up protests as has occurred in recent weeks.

O'Brien said otherwise "we will see restrictions coming from the United States. Those tend to be financial and/ or travel restrictions on the individuals responsible and their families."

On Wednesday, before the currency intervention was announced, student protester Giorgi told Reuters that he worried about the impact of possible sanctions on the national currency.

He said: "The Georgian Lari is already losing its power. It will of course affect prices of products in the country as well. So it will affect each and everyone of us, our daily lives."

(Reporting by Felix Light; Additional reporting by Gleb Stolyarov and Vladimir Abramov; Editing by Andrew Osborn/Guy Faulconbridge)