Since the beginning of October, the Uzbekistani sum has been showing weakness against the US dollar, bringing the USD/UZS exchange rate closer to the psychologically significant level of 12,000 sums per dollar. Over the month, the pair has risen by more than 1%, following a nearly 5% drop observed in the third quarter.
Recent economic events include the International Monetary Fund's (IMF) increase in its GDP growth forecast for Uzbekistan in 2026 to 7.8% (up from 6.8% projected in June). The IMF also raised the growth forecast for 2027 to 6.5%, increasing the previous estimate of 6%.
Despite the recent weakening of the national currency, favorable sentiment and improving economic prospects may support the sum.
Diplomatic Influence and Domestic Demand
In the diplomatic sphere, it is expected that Marco Rubio will lead a delegation of over 200 business representatives to Samarkand from October 17 to 22 to hold a C5+1 ministerial meeting. This visit could potentially improve the perception of Uzbekistan's economy and provide support to the sum.
Domestic demand continues to grow due to increased household incomes. Real wages rose by 10.9% in the first half of the year, and remittances increased by 13.1% in the second quarter, reaching 5.5 billion US dollars. Total remittances for the first half of the year amounted to 9.3 billion US dollars.
During the same period, banks acquired 12.3 billion US dollars in foreign currency from private individuals and sold back only 6.8 billion US dollars. This ensured a steady inflow of dollars into the domestic market, which contributed to supporting the sum.
Inflation and Foreign Exchange Reserves
Inflation remains a serious problem. Annual inflation accelerated to 6.4% in September compared to 6.2% in August, remaining above the Central Bank of Uzbekistan's target of 5%. The Central Bank maintained its key rate at 14%, with the next monetary policy decision scheduled for October 28.
Continued strong growth in household incomes may stimulate further consumption and imports, intensifying inflationary pressure. The Central Bank, which is the sole buyer of products from the country's two largest state gold mining enterprises, sold gold on international markets only in April and July of this year and has not conducted further sales since.
Gold accounts for about 90% of Uzbekistan's international reserves, making the total value of these reserves highly dependent on fluctuations in precious metal prices. In September, the country's reserves decreased by 5.5 billion US dollars, totaling 66.6 billion US dollars. Of this decrease, 4.8 billion US dollars were due to the revaluation of gold assets. Liquid foreign currency reserves amounted to only 5.92 billion US dollars, which is 10.6% less than the previous level.
Although the central bank can sell gold to obtain necessary foreign currency liquidity, its strategy for 2026–2030 involves maintaining a floating exchange rate regime and gradually reducing currency interventions.
Next week, the USD/UZS exchange rate is expected to trade in the range of 11,850 to 12,000 sums 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, which is due to be announced on October 28.
