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Opinion: what happens to the Uzbek sum’s exchange rate and whether sum will further depreciate

Пост обновлен май 27

A number of internal and external factors suggest that there will be no sharp devaluation.


The dollar’s exchange rate in Uzbekistan soared. For the first time in April 2020, the US currency rose by more than 500 sums in a week.

The Central Bank reported that they still consider the likelihood of a sharp devaluation to be low and the latest changes in the exchange rate are market-driven adjustments, in which the regulator has no intention of interfering.

Doniyor Islamov, CEO of the international investment and consulting company RB ASIA, commented on the situation on Spot:


“In the recent days, there has been a wide discussion of the depreciation of the exchange rate of the UZS against hard currencies, but if you look from the beginning of 2020, the exchange rate has declined against the US dollar by 6.4%. If the same pace continues until the end of the year, then the change in the exchange rate of the UZS to USD by 2020 will amount to 17% or 11.1 thousand sums, which is not so scary, and will slightly exceed the inflation rate in the country,” - explained Doniyor.


He noted that there are objective factors for the national currency exchange rate to change. The main ones are:


1. Decrease in currency transfers. According to the Central Bank, 85% of foreign currency transfers are accounted for Russia and 6% for Kazakhstan. In these countries, their own currency has fallen by about 20% since the beginning of the year and there is also an economic downturn.

2. Decrease in export. Many exporting companies in the country have suspended their activities or have not been operating at full capacity in the past month. The export of tourism services has plummeted for obvious reasons.

3. Currency obligations. Importing companies, as well as those with foreign currency loans, fulfill their obligations, which means the remaining demand for foreign currency.

We should not forget the behavioral reasons - many companies and individuals traditionally keep their savings in the hard currency, especially during economic turbulence. And this case is not only in Uzbekistan.


“People are stocking up in dollars due to the uncertainty of the duration over the impact of the coronavirus pandemic on the economy,”- Islamov says.


According to the Central Bank, inflation is at an acceptable level, which opens up opportunities for easing monetary policy and this was done by lowering the refinancing rate from 16% to 15%.

There are also active negotiations with international organizations to attract international loans to support the financial system of Uzbekistan and the economy as a whole.


In addition, gold, which accounts for almost 30% of Uzbekistan’s total export, increased in price by 35% over the year.

“Taking into account current economic trends, we do not expect a rapid depreciation of the UZS in the near future,” - sums up Doniyor Islamov.


There has also been no devaluation of the sum observed on the currency exchange since the was opinion issued. While on April 15, the dollar in the bidding increased by 328 sums, then on April 16 only by 19, and on April 17 it fell by 6 sums.

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