BAKU, Azerbaijan, March 26. The Central Bank of Uzbekistan (CBU) pledged to continue appropriate interventions to prevent sharp fluctuations in the soum’s exchange rate, Trend reports via the Bluestone Investment Bank.
In response to the economic uncertainty created by the conflict in Ukraine in late February, the CBU raised the policy rate from 14 percent to 17 percent at a March 17 meeting.
The CBU said it hiked rates for the first time since 2018 to ensure financial stability, dampen growing devaluation and inflation expectations, mitigate the impact of external risks to the economy, and help maintain domestic savings in the local currency.
The Uzbek soum has fallen 6.75 percent against the dollar since the Russia-Ukraine conflict began on February 24, although due to the CBU’s interventions in the foreign exchange market it has not devalued as much as the Kazakh tenge, which has lost 15.6 percent.
Of particular concern for Uzbekistan is the expected fall in remittances, which reached $8.1 billion in 2021 (approximately 88 percent of which came from Russia), with the World Bank revising its 2022 forecast for the growth rate of remittance inflows to Uzbekistan from a 3 percent increase to a 22 percent contraction.
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