TASHKENT, Uzbekistan, December 9. Standard & Poor's (S&P Global Ratings) estimates that Uzbekistan's usable foreign exchange reserves will marginally decline through 2026 due to lower gold prices and ongoing current account deficits, Trend reports.
Yet, the latest report by S&P Global Ratings said Uzbekistan's monetary policy effectiveness has been improving in recent years.
“One of the most significant reforms in that regard was the liberalization of the exchange rate regime in September 2017 to a managed float from a crawling peg, which was heavily overvalued compared with the parallel-market rate. The Central Bank of Uzbekistan (CBU) intervenes in the foreign exchange market intermittently to smooth volatility and mitigate the increase in local currency from its large gold purchases," said the report.
According to S&P Global Ratings, holdings of monetary gold of the Central Bank of Uzbekistan (CBU) comprise nearly 80 percent of total usable reserves.
"The CBU is the sole purchaser of gold mined in Uzbekistan. The Bank purchases the gold with local currency and sells it in foreign currency on the local market to offset the effect of its intervention on the Uzbek sum. We exclude assets of Uzbekistan’s Fund for Reconstruction and Development (UFRD) from the CBU's reserve assets because we consider them as fiscal assets. Our view is supported by the budgetary use of external UFRD assets in the domestic economy over the past four years. The UFRD's total assets were $16.7 billion as of October 31 of 2023, with the liquid portion at $6.5 billion,” S&P’s analysts note.
Meanwhile, Value of Uzbekistan's gold and foreign exchange reserves amounted to $32.9 billion as of November 1, 2023.
As per data provided by Uzbekistan’s Central Bank, the value increased by almost $2 billion compared to $31 billion recorded in October this year.
Moreover, the physical volume of gold amounted to 12 million troy ounces, which is equivalent to 373.2 tons, while its value fixed at $23.9 billion.