The Central Bank of Uzbekistan said on Wednesday that a sharp depreciation of the local currency soum is unlikely, despite a significant drop in the exchange rate of the Russian ruble and the Kazakh tenge.
Uzbekistan does not export oil, but sells gas to Russia and China. Millions of Uzbeks work in Russia. Kazakhstan is a key market for Uzbek fruits and vegetables.
The Central Bank said it expects only small exchange rate adjustments and plans to sell 30% more of the currency on the domestic market this year compared to 2019 amid rising gold prices. The Bank’s interventions are linked to the value of its gold reserves.
“To date, the analysis shows that there may be small fluctuations in the dynamics of the national currency, and the probability of a sharp devaluation of the soum is small,” the Central Bank said in a statement.
Uzbek authorities announced in March that they would create a $1.1 billion Anti-Crisis Fund to mitigate the negative effects of the spread of the coronavirus.
The volume of bids at the Central Bank’s Deposit auction this week was the lowest since the tool was launched in February, at $3.2 million.