The Central Bank of Uzbekistan has conducted currency interventions valued at almost $2 bn, according to a recent report. In the third quarter, the bank purchased UZS 19.5 tn ($ 1.6 bn) of gold, representing a 19.6% increase from last year. The volume of gold purchases remained consistent with the previous quarter.
Currency interventions in July-September amounted to UZS 22.8 tn ($1.9 bn), an 18% decrease compared to the second quarter. The net interventions in the foreign exchange market resulted in UZS 3.3 tn or $300 mn. The Central Bank views this as a neutral intervention due to sufficient currency supply in the domestic market.
The Central Bank plans to continue currency interventions in the 4th quarter, adhering to the principle of neutrality regarding gold and foreign exchange reserves. The bank expects the Ministry of Finance and the Fund for Reconstruction and Development to follow the same direction in utilizing foreign currency funds.
During the previous quarter, the national currency experienced a sharp depreciation of nearly 6% against the dollar, with a significant drop in mid-August.
The Central Bank's gold purchases are linked to its currency interventions. By purchasing gold, the bank prints soums buys the precious metal and sells it abroad to acquire foreign currency. This currency is then injected into the domestic foreign exchange market, helping withdraw excess issued soums.
Unlike other countries where gold producers independently export their products, the Central Bank's involvement in foreign exchange transactions is necessary in Uzbekistan.
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