Uzbek Central Bank does not rule out additional intervention to stabilize som

TASHKENT. Aug 10 (Interfax) - The Central Bank of Uzbekistan is concerned about the accelerating rate of devaluation of the national currency, the som, and is ready for additional foreign exchange interventions to stabilize its exchange rate, the Central Bank said in a statement.

The Central Bank explains the weakening of the som as due to negative trends affecting foreign currency inflow into the country and, accordingly, the volume of its supply in the domestic foreign exchange market. This situation, according to the regulator, was created due to the depreciation of the national currencies of Uzbekistan's main trading partners, Russia in particular.

"As a result, there was a slight acceleration in the rate of devaluation of the som exchange rate in the domestic foreign exchange market; a correction under the influence of fundamental factors," the report says.

According to the press service, the Central Bank has sufficient tools to prevent a sharp depreciation of the som, including additional interventions, if necessary, the press service said.

"The real effective exchange rate will stabilize by the end of the year and in the medium term," the Central Bank said.

The official exchange rate of the som against the ruble, which fluctuated in the range of 150-160 som/1 ruble in Q1 2023, then began to increase, the Central Bank said. The exchange rate crossed the threshold of 140 som / 1 ruble in early April (with a slight rollback to the 140-150 som range in May-June), 130 som / 1 ruble in early July and 120 som / 1 ruble in early August. The official exchange rate on August 10 is 119.99 som / 1 ruble.

The official exchange rate of the som against the US dollar this year was around 11,200-11,400 som/ $1 until mid-June, then the gradual weakening of the Uzbek currency began. Since the beginning of August, the exchange rate has been in the range of 11,620-11,670 som / $1. The official exchange rate as of August 10 is 11,667 som/$1.

Banks on Thursday set the selling rate for cash dollars at 12,000 som/$1.

The Central Bank of Uzbekistan suggests that the volume of money transfers to the republic from abroad, mainly from Russia, in 2023 may decrease 33.4% to $11.5 billion due to the high baseline effect in 2022, as well as the devaluation of the ruble.