Uzbekistan's international reserves experienced a slight decline in June 2024, decreasing by $293.7mn to a total of $36.3bn. This decline follows a pattern observed earlier in the year, reflecting the country's ongoing economic adjustments.
The currency portion of the reserves saw a more drop, decreasing by $796.8mn to $8.5bn. This reduction highlights the volatility in the foreign exchange markets and the challenges faced by Uzbekistan in maintaining its currency reserves.
Interestingly, the physical volume of gold in the reserves increased by 300,000 ounces. This indicates that there was likely no gold export during the month. The monetary value of the gold reserves increased by $506.6mn, reaching $27.3bn. The physical volume of gold rose from 11.4mn troy ounces to 11.7mn troy ounces, an increase of 9.3 tons.
However, the changes in the administrative composition of the reserves, particularly the segment managed by the Fund for Reconstruction and Development (FRDU), remain unclear. The bureaucratic rationalization of imports appears to be relatively stabilizing the reserves, but further details on this aspect are yet to be clarified. Transparency in the management of these reserves is crucial for maintaining investor confidence and ensuring the long-term stability of the country's financial system.
In the first quarter of 2024, Uzbekistan’s international reserves fell from $34.6bn to $32.2bn, a decrease of roughly 6.94%. The foreign currency reserves, held in convertible foreign currencies, also decreased. Starting the year at $9.4bn, they fell to $7.6bn by the end of March, a decrease of approximately 19.4%.
In April, Uzbekistan's total international reserves grew by $918mn, reaching $35.1bn. This growth was primarily due to a significant rise in gold prices. However, the foreign exchange portion of the reserves dropped by $238.6mn to $8bn.
Why Do You Need Gold Reserves?
In simple terms, gold reserves act as insurance, providing a "safety cushion" for the state. Almost all countries maintain reserves for emergency situations.
Reserves are typically held in highly liquid assets, which can be quickly traded. Gold and foreign currency meet these criteria, allowing for debt repayment or investments at any time.
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