Uzbekistan's Soum Hits Lowest Dollar Rate Since August 2023

The U.S. dollar's official exchange rate in Uzbekistan has reached its lowest level since August 2023, signaling a significant strengthening of the Uzbek soum. On August 26, the dollar traded at 11,778.52 soums, marking the fourth new low for the currency in the past month, according to the Central Bank.

Economist Mirkomil Kholboev noted that the soum's appreciation has accelerated notably in August. While the soum had weakened by a mere 0.01% against the dollar from the beginning of the year through July, it has gained approximately 1.9% in August alone. This trend aligns with a broader global pattern of the U.S. dollar weakening against several major currencies.

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The soum's strengthening has accelerated noticeably in August.

While the full impact of domestic factors is still being assessed, potential contributors to the soum's rise include robust August exports, particularly gold, driven by increasing global gold prices. Investment inflows, remittances from citizens working abroad, and external borrowing also likely played a role. Furthermore, households have become net sellers of foreign currency, with their sales exceeding purchases by about $5.5 billion in the first half of the year, an increase from the previous year.

In a related development, the International Monetary Fund (IMF) has reclassified Uzbekistan's de facto exchange-rate system from a "crawl-like" to a "floating" regime, indicating a shift towards greater market determination of the currency's value.

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The strengthening of the soum was also taking place amid a broader global trend of the US dollar weakening against several major currencies.