The increase was driven largely by a rise in the value of gold reserves, supported by higher global prices, despite a slight reduction in the physical volume of gold. At the same time, the Central Bank significantly reduced the securities portfolio held within the reserves and increased its holdings of cash and deposits.
Foreign currency reserves rose by $209 million during July, from $7.44 billion to $7.65 billion.
For the first time since securities were included in the structure of Uzbekistan’s international reserves, their volume declined. The securities portfolio fell by about $1.1 billion, or nearly 40%, from $2.86 billion to $1.76 billion.
This was offset in part by a $1.31 billion increase in cash and deposits, which rose from $4.58 billion to $5.89 billion.
The value of gold holdings increased by $365 million, from $55.76 billion to $56.12 billion. However, the physical volume of gold declined from 13.88 million to 13.85 million troy ounces, equivalent to about 430.8 tonnes.
The reduction amounted to roughly 30,200 troy ounces, or 0.94 tonnes, bringing the physical volume of gold down from the record level recorded on July 1.
Higher global gold prices more than offset the effect of the smaller physical holdings. According to the Central Bank’s statistical note, the price of gold rose from $4,016.70 to $4,052.20 per troy ounce during July, an increase of about 0.9%.
The regulator estimated the positive revaluation effect from the increase in gold prices at $490 million. This means that the increase in the value of the gold holdings resulting from higher prices was partly offset by the reduction in the physical volume of gold.
The July recovery followed a steep decline in reserves recorded in June. As of July 1, Uzbekistan’s international reserves had fallen by $6.8 billion, from $70.6 billion to $63.8 billion.
The main factor behind that decline was a sharp drop in the value of gold. Its price fell from $4,516.85 to $4,016.70 per troy ounce, with the Central Bank estimating the negative revaluation effect at about $6.9 billion.
The Central Bank has previously attributed the high share of gold in Uzbekistan’s international reserves to its conservative approach to asset management. At the same time, the regulator has been gradually diversifying the reserves to reduce their exposure to fluctuations in precious metal prices.
International reserves are a key component of the country’s financial stability. They can be used to meet external obligations, support the foreign exchange market when necessary and finance critical imports during periods of external shocks.
