BAKU, Azerbaijan, May 9. The volume of the Central Bank of Uzbekistan’s (CBU) foreign exchange interventions worth $2.4 billion from January through March 2022,Trend reports via Bluestone Investment Bank.
Russia-Ukraine conflict in late February hit currencies across the countries of the former Soviet Union including Uzbekistan, causing an increased demand for foreign currency and decreased soum liquidity.
The volume of transactions in the interbank market fell 22 percent year-over-year to 27.7 trillion soums ($2.5 billion). To reduce fluctuations in the soum’s exchange rate, which has experienced less volatility than others in the region including Kazakhstan, the CBU also permitted commercial banks to set exchange rates through call auctions on the Currency Exchange rather than at the central bank’s rate.
Uzbekistan’s GDP expanded 5.8 percent year-over-year in the first three months of 2022, despite the economic fallout of Russia-Ukraine conflict, with strong growth coming from the information and communication (27.5 percent), transportation and storage (10.1 percent), and construction (6.3 percent) sectors.
President of Uzbekistan Shavkat Mirziyoyev on April 8 signed a decree introducing a new set of reforms aimed at supporting the liberalization of markets, strengthening private property rights, accelerating the privatization drive, and attracting foreign investment.
The decree includes provisions to improve the purchasing process for state assets, allow foreigners to invest in real estate construction projects, align income tax rates for foreigners and Uzbek citizens, and to introduce new penalties for anticompetitive actions, including for public authorities and state-owned enterprises.
Additionally, the decree includes measures to accelerate the privatization of Uzbekneftegaz and Uzbekistan Airways, and to transfer control over the country’s airports to public-private partnerships.
On April 20, the president signed a new law classifying microfinance organizations, mortgage refinancing firms, and pawnshops as non-banking credit institutions and establishing a regulatory framework for lending as part of a drive to expand the availability of financial services and sources of financing in Uzbekistan.
The new law also allows microfinance organizations to provide Islamic financial services that will be regulated by the Central Bank.