Mamarizo Nurmuratov, the Chairman of the Central Bank of Uzbekistan, commented on the higher rates of the sum devaluation against the dollar in the first quarter of this year compared to January-March 2023 at a press conference on April 25.
"We call this a correction. The main reason is the demand for currency. For example, the demand for currency in the first quarter increased by 17%. Not all of this can be attributed to imports, as import growth is slowing down. In addition to imports, there are payments on external debts, which increased by $734 million compared to the first quarter of last year. This is a process that is shaped by demand," he said. As we reported earlier, debt repayment expenses in 2024 will increase from 19.17 trillion to 32.27 trillion sums.
Some media outlets reported the strengthening of national currencies in other countries, the regulator's head continued. "They cited Kazakhstan as an example. There are two factors there. Firstly, the attraction of non-government guaranteed debt has significantly increased. Secondly, the expenses of the National Welfare Fund [of Kazakhstan] have grown, which means that an additional volume of currency has been sold in the foreign exchange market," he said.
Mamarizo Nurmuratov once again reminded that the exchange rate is formed under the conditions of supply and demand.
As an example, he mentioned the strengthening of the sum against the dollar by almost 50 sums at the end of the currency trading on Thursday, April 25. According to the data he provided, the volume of dollar supply (16 million) significantly exceeded the demand (11 million), causing the national currency to strengthen to 12640.21 sums.
In March, the sum depreciated against the dollar by 1.4%, and since the beginning of the year, by 2.75%. Economist Mirkomil Kholboev analyzed the reasons for the relatively rapid devaluation of the sum and shared his opinion on whether this is a "real correction of the exchange rate," as it was in August.
It is worth noting that on Thursday, the Central Bank kept the key rate unchanged at 14%, but worsened the forecasts for inflation and GDP growth. The dynamics of the real effective exchange rate of the sum weakened by 0.9% since the beginning of the year, forming within a long-term trend, as reported by the Central Bank. With the forecasts for exchange rates and inflation of foreign trade partners, there is no pressure on the real effective exchange rate, the regulator stated.
