Experts predict temporary strengthening of UZS amid Eurobond issuance and gold price increase

The UZS continues to strengthen against the US dollar for the second month in a row, according to data from the Central Bank.

In July, the national currency strengthened by 16.63 UZS or 0.02% to 12,541.04 UZS. At the end of last month, the dollar was at its lowest since March 12.

Thus, this marked the second consecutive monthly appreciation of the national currency — for example, in June, the sum strengthened by 44.69 UZS. Over the seven months, the Uzbek sum depreciated by only 1.52%.

Meanwhile, from January to July, consumer prices rose by almost 5%, indicating an appreciation of the real exchange rate of the UZS. With a strong national currency, imports become cheaper, while exports become less attractive.

Experts believe that the strengthening of the real exchange rate of the UZS in the first half of the year is temporary. Factors supporting the national currency included the issuance of Eurobonds, rising gold prices, and currency interventions by the Central Bank.

Analysts expect the national currency to weaken at a faster pace in the second half of the year due to the growing foreign trade deficit and a decrease in remittances.