Tashkent, Uzbekistan (UzDaily.com) — Experts from the Institute for Macroeconomic and Regional Studies (IMRI) under the Cabinet of Ministers of the Republic of Uzbekistan have calculated the nominal effective exchange rate (NEER) and real effective exchange rate (REER) indices for 2024.

The calculations were based on data from 20 countries that are Uzbekistan’s main trading partners, accounting for 83% of the country's foreign trade turnover. January 2019 was chosen as the base period.

At the end of 2024, there was an increase in the real effective exchange rate index. In December 2024, the REER indicator rose by 4.8 points compared to the same month of the previous year, increasing from 106.6 to 111.4. This growth was primarily driven by two factors: the exchange rate fluctuations of the Uzbek soum against the US dollar contributed 3.3 points to the increase, while inflationary processes accounted for an additional 1.5 points.

During the first nine months of 2024, the REER index remained relatively stable, fluctuating within the range of 104.1 to 105.7. However, in the last quarter of the year, it rose significantly, gaining 6.6 points compared to the end of the third quarter.

The nominal effective exchange rate also saw an increase: by the end of 2024, the NEER index had risen by 4.1 points, from 90.0 to 94.1.

It should be noted that an increase in the REER, all other factors being equal, can impact foreign economic activity by making export goods less competitive due to their rising costs, while simultaneously reducing the price of imported goods.

The key factor behind the REER increase in 2024 was the more significant depreciation of the national currencies of Uzbekistan’s main trading partners against the US dollar compared to the depreciation of the Uzbek soum. Over the twelve months of 2024, the Uzbek soum nominally weakened against the US dollar by 3.8%. In contrast, the Russian ruble depreciated by 16.8%, the Kazakhstani tenge by more than 15.5%, and the Turkish lira by nearly 16.6%. As a result, this factor contributed 3.3 points to the growth of the REER index.

An additional impact on the index increase came from the difference in price dynamics between Uzbekistan and its key trading partners.

By the end of 2024, the inflation rate in Uzbekistan stood at 9.8%. In comparison, inflation in Russia reached 9.5%, in Kazakhstan—8.6%, while in China, it remained as low as 0.2%. Consequently, the influence of inflationary factors on the REER index was estimated at 1.5 points.