Tashkent, Uzbekistan (UzDaily.com) -- During the remaining months of 2018, the Central Bank of Uzbekistan does not expect a significant fluctuation in the exchange rate relative to the beginning of the year.

On 18 September, the dollar and euro exchange rates in Uzbekistan sharply increased compared to last week. The dollar went up by 176.83 soums and reached 8039 soums, the euro - by 266.16 soums to 9347.75 soums.

The Central Bank noted that since August 2018, the influence of external factors, especially the devaluation trends of the currencies of the main trading partners (Russia - 19%, Kazakhstan - 17%, China - 9%, Turkey - 56%) impacted to the exchange rate of soums.

According to the calculations, a significant change in the exchange rates of trading partners is reflected in the exchange rate of the national currency with a time lag of from one to three months, the regulator said.

The devaluation of the currencies of major trading partners significantly strengthened the real exchange rate of the soum against these currencies (against the ruble - 29%, tenge - 22%, Turkish lira - 67%, Chinese yuan - 14%).

This negatively affects the competitiveness of domestic producers both on external and domestic markets, affecting the level of demand and supply in the domestic foreign exchange market through various channels.

First, the sharp devaluation of the above-mentioned currencies made more expensive products of domestic exporters and reduced their currency earnings.

Secondly, in the domestic market, locally produced goods have become less competitive in price compared to foreign goods, which stimulates imports from these countries and creates additional demand for foreign currency.

Third, the depreciation of the ruble and other currencies of countries that account for the main flows of cross-border remittances of individuals has led to a reduction in the volume of these transfers.

Under the influence of the above factors, since August 2018, there is a market correction of the soum echange rate, which as of 19 September reached 8062 soums per dollar.

The regulator said that for the remaining months of 2018, there is no significant fluctuation in the exchange rate relative to the beginning of the year.

The current trend of the soum exchange rate, smoothing out influence of external factors, helps the national economy to adapt to changing external conditions. In particular, the risks of reducing the volumes of foreign exchange earnings from exports and cross-border transfers are to some extent minimized by an increase in their soum equivalent.

The Central Bank underlined that the regulator will continue to intervene in the foreign exchange market as before to prevent excessive volatility of the exchange rate, without affecting its fundamental trend.

The Central Bank does not pursue the goals of increasing or using gold reserves to maintain a certain level of the exchange rate. As it was stated earlier, the Central Bank adheres to the principle of "neutrality of gold and currency reserves".

That is, the sale of foreign currency in the foreign exchange market is carried out in the volumes of gold acquired with a view to sterilizing liquidity. At the same time, the volume of interventions can vary between months, reflecting the seasonal nature of the volume of foreign currency inflow to the domestic foreign exchange market.

Devaluation of the soums has a certain influence on the level of domestic prices. Thus, according to the estimates of the Central Bank, a one-percent devaluation leads to an acceleration of annual inflation by 0.2 percentage points.

In order to minimize the influence of external factors and exchange rate dynamics on the level of inflation and inflation expectations, a possible correction of the monetary policy course will be discussed at the meeting of the Central Bank Board on 22 September 2018.