BAKU, Azerbaijan, Jan. 9
By Fakhri Vakilov - Trend:
Total money supply in Uzbekistan increased by 13.8 percent in 2019, and amounted to $9.5 billion and the money supply in national currency increased by 14.4 percent ($ 6.5 billion), Trend reports citing Uzbekistan’s Central Bank.
According to the Central Bank, over the past year, there have been positive changes in the structure of the money supply. In particular, time deposits in national currency grew by 43 percent, including individuals - by 54 percent. The proportion of household deposits in deposits increased from 25 percent to 31 percent, their volume reached $2.1 billion.
Cash in circulation increased by 9.4 percent, which is less than the growth rate of the aggregate money supply. As a result, over the year, the share of cash in the total money supply decreased from 27.6 percent to 26.6 percent.
“In general, this trend indicates a gradual increase in public confidence in the banking system and the positive impact of monetary policy on savings activity in the economy,” analysts at the Central Bank said.
Thus, the Central Bank's press service reported that the activity of banks in attracting foreign credit lines, as well as in the development of the consumer lending market, has intensified.
As a result, the volume of credit investments in the economy in 2019 increased by 50.9 percent and amounted to $21.7 billion. In particular, loans in national currency increased by 48.7 percent, including 63.5 percent for the population and 53.8 percent in foreign currency.
According to preliminary estimates, with an increase in foreign economic operations by an average of 1.2 times, the current account deficit of the balance of payments at the end of 2019 amounted to $2.8 billion, which is $0.8 billion less than in 2018.
“Considering that a significant part of imports was financed from foreign currency loans of banks ($6.2 billion), the formation of a current account deficit at this level did not put significant pressure on the foreign exchange market and, consequently, on the exchange rate,” financial analysts say .
According to the Central Bank, the approach taken to ensure the “neutrality” of gold and foreign exchange reserves made it possible to ensure their safety. As a result, the volume of gold and foreign exchange reserves at the end of 2019 amounted to $28.6 billion, an increase of $2.2 billion compared to the beginning of the year.
In 2019, total demand in the domestic foreign exchange market amounted to $15.5 billion, an increase of 37 percent, while supply increased by 44 percent and reached $11.7 billion.
In order to sterilize excess liquidity arising from the purchase of $3.8 billion in monetary gold, the Central Bank sold foreign currency funds in the amount of $3.5 billion.
“Moreover, the Central Bank’s foreign exchange interventions in 2019 were carried out within the framework of market exchange rates, without affecting the fundamental trend of the exchange rate,” the report said.
The dynamics of the exchange rate was formed taking into account supply and demand in the foreign exchange market, reflecting internal and external factors of influence.
In the first half of the year, amid moderate growth in supply and demand, as well as relatively small volumes of interventions compared to target volumes of sales, the exchange rate of the soum to the US dollar during trading sessions on the currency exchange weakened by 2.8 percent.
In July and August, under the influence of the devaluation of the currencies of countries - trading partners and, as a result, increased devaluation expectations, as well as increased demand for foreign currency and Central Bank interventions, the exchange rate was adjusted for these conditions, depreciating by 10.2 percent.
In the following months of the year, Uzbek soum rate remained relatively stable, devaluing by 1.3 percent during September and November, and in December it slightly strengthened by 0.1 percent.
Thus, during 2019, the exchange rate of the national currency to the dollar devalued by 13.9 percent compared to the beginning of the year - from 8,341 to 9,501 soums per US dollar.
Follow author on Twitter:@vakilovfaxri