Uzbekistan's FX Supply Outpaced Demand in H1, Central Bank Says

Tashkent, Uzbekistan (UzDaily.uz) — Foreign currency supply in Uzbekistan's domestic market grew faster than demand in the first half of 2026, according to the Central Bank's review of the domestic foreign exchange market.

Total demand for foreign currency reached about US$32 billion, up 20% from January-June 2025, while supply, excluding Central Bank operations, increased by 31% to US$27.8 billion.

Demand from legal entities rose 19% to US$25.2 billion, while demand from individuals increased 26% to US$6.8 billion.

Foreign currency supply from companies and banks amounted to US$13.5 billion, up 29% year-on-year. Individuals supplied US$12.3 billion, while the Ministry of Investments, Industry and Trade and the Fund for Reconstruction and Development contributed about US$2 billion.

Exporters' foreign currency earnings increased by 30% to US$10.1 billion. Of that amount, US$5.6 billion, or 55%, was sold on the domestic market, up US$1.2 billion, or 26.4%, from a year earlier.

In the structure of import financing, the share of funds purchased on the foreign exchange market increased from 63.1% to 67.2%, while the share of companies' own foreign currency resources declined from 23.7% to 22.6%. The share of foreign currency loans fell from 13.2% to 10.2%.

An additional source of foreign currency supply came from a positive net balance of US$5.5 billion in households' foreign exchange transactions with banks, as well as inflows of international remittances. The country received US$9.3 billion in remittances, while outflows totalled US$1.3 billion.

Against this backdrop, the soum remained relatively stable, trading within a range of 11,935 to 12,320 per US dollar. At the end of June, the exchange rate stood at 12,009 soums per US dollar, virtually unchanged from the beginning of the year. At the same time, average daily two-way exchange rate volatility increased from 22.7 to 30.2 soums, which the Central Bank attributed to a more market-based exchange rate formation.

The regulator said it sterilised additional liquidity generated by its monetary gold operations through foreign exchange transactions under the neutrality principle and other monetary policy instruments.

In its June Article IV report, the International Monetary Fund reclassified Uzbekistan's exchange rate regime from a "crawl-like arrangement" to a "floating" regime.

According to the review, 33 countries, including South Korea, New Zealand, Malaysia, Türkiye, Thailand, Armenia and Kazakhstan, currently have the same classification. It added that the IMF considers exchange rate flexibility an important condition for effective inflation targeting and for cushioning external shocks.

By the end of this year and into next year, the Central Bank plans to develop a risk-based strategy for foreign exchange market operations, expand the market-making institution, improve trading infrastructure, including settlement, clearing and market monitoring systems, and strengthen the legal framework for hedging foreign exchange risks, including through derivative financial instruments.