Tashkent, Uzbekistan (UzDaily.com) – In July-August 2019, a certain acceleration in the growth of demand for foreign currency was observed under the influence of internal and external factors, and as a result, the devaluation of the national currency accelerated, the Central Bank of Uzbekistan said.

In particular, if in January-July 2019, the dollar exchange rate increased by 4% (from 8 336 to 8 667 soums per 1 dollar) and the monthly growth amounted to an average of 0.6%, then in August there was a sharp (8.2% ) exchange rate growth. However, by September, the dollar exchange rate returned to its previous trend, and monthly growth slowed to 0.5%. This was reported by the Central Bank press service.

The devaluation of the national currency also affected the propensity for saving and savings activity of the population. In particular, a monthly survey conducted by the Central Bank shows that in June-September 2019 there was an increase in the share of respondents who prefer to keep their savings in foreign currency (including in US dollars).

In this, the share of respondents who prefer to keep savings in cash in US dollars increased from 19% in May to 33% in August, while the share of those who prefer to keep savings in deposits in foreign currency increased from 17% in May to 24% in September. At the same time, after stabilization of the exchange rate in September, the share of respondents who prefer to keep cash savings in US dollars decreased from 33% to 29%.

It should be noted that despite the increase in short-term inflationary and devaluation expectations, there was no significant outflow of deposits in the national currency or a significant change in the structure of deposits. At the same time, although the growth rate slowed down, the positive dynamics of deposits continued.

At the same time, the share of term and savings deposits of individuals in September increased by 3 percentage points and as of 1 October 2019 reached 72% of the total balance of deposits of individuals in national currency. In general, the devaluation of the national currency did not significantly change the share of term and savings deposits in the national currency.

At the same time, interest rates on deposits in national currency have had an increasing trend over the past two months. In particular, in August-September of this year the weighted average interest rate on term deposits of individuals increased by 1.0 percentage points to 18.8%, and on deposits of legal entities by 0.8 percentage points to 16.7%.

The interest rates on term deposits in foreign currency in September remained almost unchanged at 4.5% for deposits of individuals and 4.9% for deposits of legal entities.

Thus, we can conclude that the formation of certain sentiments regarding the transfer of savings from the national currency to a foreign one, described in the next review of inflation expectations of the Central Bank, was not fully implemented. This is primarily due to the fact that commercial banks, based on market principles, responded to the depreciation of the exchange rate by increasing interest rates on deposits in national currency.