Tashkent, Uzbekistan (UzDaily.com) -- In 2018, the total volume of interventions in the domestic foreign exchange market amounted to US$3.8 billion (of which US$3.2 billion was from the Central Bank), which covered 37% of the total demand for foreign currency . This was reported by the Central Bank of Uzbekistan.

In the fourth quarter of 2018, the total volume of interventions increased by US$769 million compared to 2017. The total annual demand for foreign currency reached US$10.4 billion, which is 1.5 times more than the 2017 figure.

The increased demand for foreign currency was caused by the following factors:

firstly, against the background of rapid growth in lending to the economy and government spending, investment in fixed assets in the form of imports of equipment, technologies and production lines has significantly increased;

secondly, expansion of construction work in the economy in the context of limited domestic supply caused an increase in imports of finished building materials and raw materials for their production (mainly for the metallurgical industry);

thirdly, increase in consumer demand and production in the basic sectors of the economy caused an increase in imports of raw materials;

fourth, with the growth of production and sales of domestic automotive products, imports of raw materials, materials, components and production lines for the automotive industry increased.

In addition to interventions, the demand for foreign currency was met through foreign direct investment and loans, export earnings (US$14.3 billion) and international remittances (US$5.1 billion).

In turn, sufficient volumes of foreign currency flows prevented sharp fluctuations in the exchange rate. The increase in imports by 39.6% (US$19.6 billion) is to a certain extent due to the growth of government spending and lending to the economy.

As a result, the trade balance deficit increased by US$3.8 billion compared with 2017 and amounted to US$5.3 billion. High demand for foreign currency, in turn, increased the devaluation pressure on the national currency exchange rate.