Uzbekistan’s UZS to Strengthen Temporarily Due to Eurobond Issuance and Gold Price Surge
The Uzbek Som (UZS) has been steadily strengthening against the US dollar for the second consecutive month, with the national currency appreciated by 58.81 sums since the beginning of summer. According to data from the Central Bank, in July alone, the UZS strengthened by 16.63 UZS or 0.02% to 12,541.04 UZS. This marks the second consecutive monthly appreciation of the UZS, following a 44.69 UZS appreciation in June.
Despite this positive trend, consumer prices have risen by almost 5% from January to July, indicating an appreciation of the real exchange rate of the UZS. A strong national currency can make imports cheaper and exports less attractive.
Experts believe that the temporary factors supporting the UZS in the first half of the year, such as the issuance of Eurobonds, rising gold prices, and currency interventions by the Central Bank, may lead to a weakening of the national currency in the second half of the year. This is expected to be driven by a growing foreign trade deficit and a decrease in remittances.
Overall, while the UZS has experienced significant appreciation in recent months, there are concerns about its future trajectory as external factors come into play. Analysts will continue to monitor the situation closely to see how the UZS performs in the coming months.
