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Uzbek Central Bank moves to "cheap soum policy" to support exports

21 August 2018 13:26 (UTC+04:00)
Uzbek Central Bank moves to "cheap soum policy" to support exports

By Trend

The Central Bank of Uzbekistan (CB) unveiled new exchange rates, which entered into force on August 21.

The US dollar's exchange rate against the Uzbek soum continues its growth. From Aug. 21, $1 is worth 7803.79 soums, which is 13.59 soums more than last week.

The euro's exchange rate also shows significant growth. It value rose to 8925.19 soums, which is 36.57 soums higher than last week.

The ruble also grew slightly in the background of news about the next US sanctions. Thus, the ruble's exchange rate against the soum increased by 0.63 soums and is 115.70 soums on Aug. 21.

During the past few months the Uzbek soum has demonstrated a steady growth against the US dollar.

However, at the beginning of July 2018, the director of the Center for Economic Development in Uzbekistan, Yuli Yusupov, noted that after achieving targets related to inflation, the Central Bank of Uzbekistan can switch to a "cheap sum" policy. This policy will help expand exports and boost the competitiveness of Uzbek enterprises.

"The exchange rate is a natural regulator of the intake and outflow of currency. And accordingly, there is a certain equilibrium exchange rate, which ensures the equality of demand and supply in the foreign exchange market," Yusupov said.

"After ensuring the stability of monetary circulation, the policy of the Central Bank will inevitably soften. In particular, the artificial low exchange rate of the soum (expensive US dollar) is an important tool of the export orientation strategy, which has been successfully used by many countries. The policy of cheap soum will accelerate the development of the economy," the expert added.

Given the fact that recently there has been a noticeable slowdown in inflation (in some cases even deflation), it is possible that the Central Bank of Uzbekistan, has decided to move away from the policy of maintaining the soum's high rate in order to support export growth.

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