BAKU, Azerbaijan, Dec. 9
By Klavdiya Romakayeva - Trend:
The Central Bank of Uzbekistan (CBU) plans to implement a number of measures to further improve the domestic foreign exchange market, thereby increasing the flexibility of the exchange rate to internal and external shocks, Trend reports referring to the CBU.
As a result of the taken measures, the exchange rate will absorb the impact of shocks in the face of external risks. Thus, its role as an automatic stabilizer will increase.
The Central Bank plans to move from the current fixing method to the continuous auction method - matching when determining the exchange rate.
Currently, foreign exchange trading in the domestic foreign exchange market of Uzbekistan is carried out by the "fixing" method. Most developing countries, as well as all countries that have switched to inflation targeting, bid on the basis of continuous auctions (matching).
“When using the continuous auction method, foreign exchange trading in the domestic foreign exchange market will last longer, buyers and sellers will trade at different rates at mutually agreed orders, as a result of which the role of market participants in determining the exchange rate will increase,” the Central Bank said.
The CBU will carry out its interventions as one of the market participants. This method will make it possible to more widely implement market principles in the formation of the exchange rate, ensuring its formation entirely based on supply and demand, and also increase its flexibility to changes in macroeconomic conditions.
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