Tashkent, Uzbekistan (UzDaily.com) -- The domestic foreign exchange market in 2021 was characterized by an increase in the volume of both demand and supply of foreign currency against the backdrop of high economic growth and favorable conditions in foreign markets, the Central Bank of Uzbekistan said.

In 2021, there was an increase in foreign trade turnover. In particular, export earnings (excluding gold exports) amounted to US$11.6 billion, up 34% year-on-year. At the same time, import payments increased by 25% compared to 2020 and reached US$25.7 billion.

The total volume of demand in the domestic foreign exchange market in 2021 amounted to US$26.1 billion, having increased by 1.7 and 1.3 times compared to 2019 and 2020, respectively.

The total supply of foreign currency in the foreign exchange market in the reporting year reached US$22.9 billion, having increased by 1.6 times compared to the previous year (in 2020 - US$14.3 billion, in 2019 - US$11.7 billion).

In particular, during this period:

economic entities sold US$11.0 billion, which is 1.7 times more than last year (US$6.7 billion);

banks and individuals sold US$7.4 billion, or 44% more than in 2020 (US$5.1 billion);

I. Operations with legal entities

In 2021, the demand for foreign currency from legal entities increased by 40% compared to 2020 (US$15.4 billion) and amounted to US$21.5 billion.

Changes in foreign exchange transactions introduced on 15 February 2021 made it possible to independently carry out direct foreign exchange transactions with clients in the over-the-counter market segment.

As a result, direct transactions of commercial banks with business entities have grown significantly and occupy the bulk of transactions (94%) in the market, having increased to US$20.3 billion in the reporting year (US$3.7 billion in 2020).

In the structure of import financing sources, in January-December 2021, the share of funds acquired (conversion) in the domestic foreign exchange market amounted to 60%, the share of import financing at the expense of own funds in foreign currency - 25%, at the expense of loans in foreign currency - 16% . In 2020, the same figures were 57%, 24% and 18%, respectively.

In the target structure of foreign currency purchases, the main share or 57% is payment for the import of equipment, goods and raw materials for production purposes, 20% - repayment of loans in foreign currency, 20% - imports of consumer goods and medicines, 1% - repatriation of income of foreign investors and the remaining 2% purchased for other purposes.

The average monthly number of business entities that purchased foreign currency in the domestic foreign exchange market during 2021 amounted to 9887, which is 48% and 39% more compared to 2019 and 2020, respectively (in 2019 - 6686, in 2020 - 7137).

II. Operations with individuals

The volume of foreign currency sold by individuals through exchange offices in the reporting period amounted to US$7.1 billion, having increased by 1.5 times compared to the previous year (US$4.6 billion in 2020) .

At the same time, individuals purchased foreign currency in the amount of US$4.6 billion, which is 12% higher than the amount of foreign currency purchased in the same period in 2020 (US$4.1 billion).

The volume of transactions with individuals in 2020-2021

In general, the supply of foreign currency by individuals in 2021 exceeded the demand for it by US$2.5 billion (an increase of 5 times compared to 2020), which served as an additional source of supply in the domestic foreign exchange market.

The volume of receipts through international money transfer systems for 12 months of 2021 amounted to US$8.1 billion, which is 34% more than in 2020 and 2019 (US$6.0 billion).

III. Exchange rate dynamics

The dynamics of the exchange rate of the national currency in 2021 was formed based on supply and demand factors in the domestic foreign exchange market, as well as under the influence of external conditions.

In particular, the growth in demand as a result of the acceleration of economic and investment activity in the republic was balanced by an increase in the volume of supply from business entities and the population against the backdrop of favorable external economic conditions, as well as rising world prices for the main export goods.

As a result, the exchange rate of the national currency against the US dollar depreciated by 3.4% in the reporting year. In 2019 and 2020 depreciation of the national currency against the US dollar amounted to 13.9% and 10.1%, respectively.

In 2021, the real effective exchange rate index appreciated by 5.2% amid devaluation of the exchange rates of trading partner countries, as well as higher domestic inflation than in partner countries.