Tashkent, Uzbekistan (UzDaily.com) -- Growing financial difficulties in the United States are raising the dollar. The higher the yield on guaranteed government bonds, the less interest there is in shares and assets of other countries with higher risks. 

Increased demand for US government debt drives up the dollar. Increased US debt, including military spending and premiums, is attracting investors, pushing Treasury yields to a record 5% on 10-year notes. This is forcing investors around the world to reconsider their holdings, selling riskier assets in favor of the dollar and US bonds, which puts pressure on the currencies of other countries.

As of 23 October 2023, the national currency exchange rate was 12,210 soums per 1 US dollar. The weekly weakening of the dollar by 0.06% against the Uzbek soum indicates the stability of the Uzbek economy, which is successfully overcoming internal and external challenges.

Data provided by the Statistics Agency shows that Uzbekistan’s GDP increased by 5.8%, slightly lower than the growth in the comparable period of the previous year (6.2%). Despite geopolitical tensions, the country’s key trading partners are creating favorable conditions for economic growth, including Kazakhstan with 4.7% GDP growth, Kyrgyzstan with 4.2% GDP growth, and Russia with 2.5% GDP growth.

Investment in fixed assets grew significantly, increasing from 3.3% in the first 9 months of 2022 to 11.8% in the same period in 2023. Non-centralized investment also increased by 13.6%, including foreign direct investment, up 16.3%, and loans from commercial banks, up 27%. Investments of the population also showed an increase of 10.6%. This indicates the growing importance of decentralized investments, which account for 86.9% of the total, up from 85.5% in the previous year.

Uzbekistan’s foreign trade in the first 9 months of 2023 increased by 22.1%, reaching US$44.8 billion. Exports increased by 23.5%, while imports grew by 21%. Exports were supported by increased supplies of gold, machinery and transport equipment, services, finished goods and food products. Imports, on the other hand, increased for machinery and transport equipment, fuels, finished goods and chemical products.

Overall, the economy of Uzbekistan continues to show positive growth, overcoming both internal and external challenges. However, geopolitical risks should be taken into account, which may affect the cost of energy resources and the yield of US government bonds, and thus the exchange rate of the national currency. In this context, the dollar exchange rate to the Uzbek soum will continue to strengthen, being in the range of 12200-12255 soums per 1 US dollar.

Aziz Abdusalomov, Alpari analyst