Tashkent, Uzbekistan (UzDaily.com) -- The exchange rate of the Uzbek soum against the US dollar continues to decrease in the light of increasing geopolitical tensions and slowing inflation in developed countries. On 16 October 2023, the exchange rate reached 12,217.85 soums per 1 US dollar and is approaching a historical low.

The main factors influencing the current exchange rate of the soum include:

Geopolitical tensions, sanctions against Russia and current global conflicts that negatively affect the global economy and increase uncertainty. This stimulates demand for the US dollar as a safe haven currency and weakens other currencies, including the Uzbek sum.

In developed countries, the growth rate of the consumer price index is decreasing, and they are still far from achieving the set goal of 2%. In the first three quarters of 2023, the Uzbek soum fell by about 8.25%. Annual inflation in Uzbekistan today is about 9%, although according to the forecasts of the International Monetary Fund, by the end of the year it may reach 11.8% with GDP growth at 5.5%.

The US dollar index (DXY), which reflects the dollar’s exchange rate against a basket of six major currencies: euro (EUR), yen (JPY), pound sterling (GBP), Canadian dollar (CAD), Swedish krona (SEK) and Swiss franc (CHF), rose by 0.54% over the previous week a week, while the Uzbek soum fell by 0.31% against the dollar over the same period.

The conflict in the Middle East also contributes to an increase in investor demand for safe haven assets, including the dollar.

Based on this, it can be assumed that the dollar exchange rate against the Uzbek soum will continue its upward trend and be in the range from 12,200 to 12,250 soums per 1 US dollar.

Aziz Abdusalomov, Alpari Analyst