Uzbek Soum Weakens in October as Dollar Nears 12,000 Soums

Tashkent, Uzbekistan (UzDaily.uz) — The Uzbek soum has weakened against the US dollar since the beginning of October, bringing the USD/UZS exchange rate closer to the psychologically important level of 12,000 soums per dollar. The currency pair has risen by more than 1% since the start of the month, following a decline of nearly 5% in the third quarter.

Recent economic developments include the International Monetary Fund's (IMF) upward revision of its forecast for Uzbekistan's gross domestic product growth in 2026 to 7.8%, from the 6.8% projected in June. The IMF also raised its growth forecast for 2027 to 6.5%, compared with the previous estimate of 6%.

Favourable sentiment and improved economic prospects could support the national currency despite its recent weakening.

On the diplomatic front, Marco Rubio is expected to lead a delegation of more than 200 business representatives to Samarkand from 17 to 22 October for a C5+1 ministerial meeting. The visit could also improve sentiment towards Uzbekistan's economy and provide support for the soum.

Domestic demand continues to be driven by rising household incomes. Real wages increased by 10.9% in the first half of the year, while remittances rose by 13.1% in the second quarter to US$5.5 billion. Total remittances reached US$9.3 billion in the first half of the year.

During the same period, banks purchased US$12.3 billion in foreign currency from individuals and sold back just US$6.8 billion. This has provided a sustained supply of dollars to the domestic market, supporting the soum.

Inflation remains a key concern. Annual inflation accelerated to 6.4% in September, up from 6.2% in August, remaining above the Central Bank of Uzbekistan's 5% target.

The central bank has kept its policy rate at 14%, with its next monetary policy decision scheduled for 28 October. Continued strong growth in household incomes could drive further increases in consumption and imports, adding to inflationary pressures.

The central bank, which is the sole buyer of output from the country's two largest state-owned gold mining enterprises, sold gold on international markets only in April and July this year and has not conducted further sales since then.

Gold accounts for around 90% of Uzbekistan's international reserves, leaving their overall value heavily dependent on movements in the precious metal's price.

In September, the country's reserves fell by US$5.5 billion to US$66.6 billion. Of that decline, US$4.8 billion resulted from the revaluation of gold holdings. Liquid foreign currency reserves stood at just US$5.92 billion, down 10.6% from the previous level.

Although the central bank could sell gold to obtain the foreign currency liquidity it needs, its strategy for 2026–2030 envisages maintaining a floating exchange rate regime and gradually reducing foreign exchange interventions.

For the coming week, the USD/UZS exchange rate is expected to trade within a range of 11,850 to 12,000 soums per dollar.

The main factors likely to influence the market will be Marco Rubio's visit to Samarkand and the central bank's interest rate decision, scheduled for announcement on 28 October.