Deputy Head of Uzbekistan’s Central Bank: Gold Remains a Strategic Asset, but Diversification Is Being Strengthened

Tashkent, Uzbekistan (UzDaily.com) — In late November, Abror Mirzo Olimov, Deputy Chairman of the Central Bank of Uzbekistan, spoke at a roundtable on the role of a floating exchange rate under inflation-targeting policies.

In his presentation, he focused on the dynamics of the country’s international reserves, the significance of gold, and the regulator’s approach to asset management.

Olimov emphasized that international reserves are maintained to strengthen confidence in macroeconomic policy, mitigate external shocks, and ensure the country’s ability to meet foreign obligations on time. According to him, the reserve management system guarantees the Central Bank full control over foreign assets and their readiness for prompt deployment if needed. The three core principles of this policy remain safety, liquidity, and profitability.

Over the past five years, Uzbekistan’s international reserves have grown from US$29.2 billion in 2020 to US$66.3 billion in 2025. A key factor in this growth was the sharp increase in global gold prices. The physical volume of gold reserves has remained virtually unchanged—around 12 million troy ounces—but their market value rose from approximately US$1,500 per ounce in 2020 to over US$4,000 in November 2025 and is currently approaching US$4,600. This increase boosted both the total value of reserves and the share of gold within them.

As of November 1, gold accounted for 81% of international reserves, rising to 83% by year-end.

Olimov noted that for the Central Bank, gold remains a strategic long-term investment. Its high share reflects a cautious, safety-oriented approach, as gold carries no credit risk, historically retains value, and reduces the vulnerability of reserves to short-term market fluctuations. Gold is also viewed as a savings asset for future generations and a stabilizing factor for the economy.

He highlighted the renewed role of gold in the global financial system, noting that investors increasingly use it as a hedge against inflation and market volatility, as well as a “safe haven” amid geopolitical uncertainty. The share of gold in global international reserves has risen from about 10% in 2015 to 27% today, with its total market value exceeding that of U.S. Treasury securities. Over the same period, the share of currency assets decreased from 90% to 73%.

Olimov stressed that gold prices nearly doubled over the past five years due to the pandemic, global supply chain disruptions, and rising geopolitical tensions. He emphasized that today’s international financial system is fundamentally different from that of five years ago, requiring institutions managing state assets to reassess their portfolio structures.

He also noted that by international standards, Uzbekistan’s reserves remain very high, covering roughly 12 months of imports—well above the International Monetary Fund’s minimum benchmark. The short-term external debt coverage ratio and IMF reserve adequacy indicators significantly exceed recommended levels.

Since 2020, the Central Bank has been gradually improving its reserve management system. It joined the World Bank’s RAMP program, established an Investment Committee in 2023, and in 2024 began investing in U.S. Treasury bills for the first time. By 2025, the volume of such investments reached US$1 billion and exceeded US$1.5 billion by year-end. Olimov emphasized that U.S. Treasuries offer high liquidity, a developed repo market, and flexible portfolio management.

The diversification process, he said, is carried out by gradually reallocating funds from short-term money-market instruments into highly liquid, high-rated securities. Currently, the Central Bank cooperates with 35 international banks rated A or higher while developing a strategic asset allocation concept based on scenario analysis, optimization of risk-return ratios, and portfolio modeling.

During the discussion, IMF consultant Etibor Jafarov pointed out the risks associated with a high concentration of gold in Uzbekistan’s reserves. He noted that an excessive share of a single asset could reduce portfolio efficiency, particularly given gold price volatility. For gold-producing countries, this concentration is especially sensitive, as a price drop can simultaneously affect both the economy and the central bank’s reserves.

Responding to these remarks, Olimov explained that the growth of gold’s share was not the result of a deliberate strategy but rather a consequence of sharply rising global prices. In 2020, gold accounted for roughly 56% of reserves, rising to 81% by November 2025.

He said this triggered the diversification process in 2024. The regulator recognizes that gold price trends cannot be precisely forecast and has been steadily expanding investments in other asset classes, particularly fixed-income instruments.

Olimov stressed that safety and liquidity remain the Central Bank’s priorities, with yield considered secondary. He also noted that there are no strict target thresholds for gold’s share, but the bank will continue its diversification course.

Former Deputy Chairman of the Czech National Bank and international currency markets expert Karel Bauer supported this approach, noting that broader asset diversification, including the currency structure of reserves, enhances resilience. He also emphasized that gold itself does not generate income, and price appreciation represents unrealized accounting gains, which can distort assessments of the reserves’ true financial position.