BAKU, Azerbaijan, Apr. 14
By Ilkin Seyfaddini – Trend:
The domestic currency market of Uzbekistan saw some increased volatility of the Uzbek soum against foreign currencies in April 2020, Trend reports citing a statement of the Central Bank of Uzbekistan.
In particular, the exchange rate of Uzbek soum against the US dollar has decreased by 1.8 percent since the beginning of April against the last trading session held at the currency exchange on 13 April, and by 2.7 percent YTD to 9,762 soum per dollar.
The Central Bank reminded that the dynamics of the exchange rate of soum is formed under the influence of emerging internal and external factors of supply and demand, primarily based on the dynamics of current account operations.
Slowdown of operations of trade and investment nature, against the background of measures undertaken both in trade partner countries and Uzbekistan to prevent coronavirus from spreading, has led to simultaneous reduction of import and export volumes, and, accordingly, to decline in activity in the domestic currency market. Thus, the volume of export earnings in March fell by 10 percent compared to the previous month.
Lower cross-border cash flows due to quarantine measures and slower economic activity, devaluation of national currencies in Russia and Kazakhstan, also had a negative impact on the volatility of the Uzbek soum. In particular, remittances to the country in March amounted to $296 million, 23 percent less than the previous month.
"Since March 2020, there has been a significant increase in the volume of foreign currency purchases by the population, which amounted to 45 percent in March, and 28 percent within first eight working days of April," the report says.
According to the analysts of the Central Bank, the probability of a sharp devaluation of the national currency remains low, and according to preliminary forecasts, in the short and medium term, the dynamics of the Uzbek soum exchange rate will be formed close to its fundamental trend with minor fluctuations.
The Central Bank also reports that the cash offices of commercial banks have sufficient foreign currency cash to carry out conversion operations and all banknotes are disinfected. The exchange offices of banks operate in the normal mode and there are no limits and restrictions on the purchase and sale of foreign currency in cash by banks.
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