The Central Bank moves to a wider corridor of daily fluctuations in the exchange rate
Tashkent, Uzbekistan (UzDaily.com) – From the beginning in the second half of July this year, especially during the last week, there has been an acceleration fluctuation of the national currency of Uzbekistan against the foreign currency in the domestic foreign exchange market, the Central Bank said.
The formation of this situation was facilitated by a number of external and internal factors, the report said.
Since July 2019, in some countries - the main trading partners of Uzbekistan (including Russia, Kazakhstan and China), a tendency has been developing for the depreciation of national currencies, which to some extent affects the exchange rate expectations and the decision-making process by currency market participants.
Internal factors are mainly associated with a steady trend of increasing demand for foreign currency from business entities - importers.
In the conditions of relative stability of supply and demand in the domestic foreign exchange market, Central Bank interventions, the main purpose of which is to sterilize excess liquidity resulting from the purchase of monetary gold from producers, are used as a tool to smooth out short-term exchange rate fluctuations in the domestic foreign exchange market.
At the same time, taking into account the current situation in the domestic foreign exchange market, the Central Bank is switching to a wider corridor of daily fluctuations in the exchange rate during currency interventions.
The Central Bank supposes a certain small market adjustment of the exchange rate with the possible continuation of short-term volatility and a return to the fundamental trend.