Tashkent, Uzbekistan (UzDaily.com) — Experts from the Institute for Market Research and Innovation (IMRI) have calculated the indices for nominal and real effective exchange rates of the Uzbek soum for the period from January 2019 to June 2024.

Key Findings:

Real Effective Exchange Rate (REER): From 2019 to 2023, the real effective exchange rate of the Uzbek soum appreciated by 7.6%. However, since the beginning of 2024, the REER has shown a slight decline.

Nominal Effective Exchange Rate (NEER): During the same period, the nominal effective exchange rate decreased by nearly 6.6%. Since the start of 2024, the NEER has remained relatively stable.

Factors Influencing the Exchange Rates:

Change in the Nominal Exchange Rate of the Soum: From early 2023 to June 2024, the Uzbek soum depreciated against the US dollar by approximately 12%. Significant devaluations were observed in Russia (27%) and Turkey (74%), while more moderate depreciations occurred in China (6.3%) and Kyrgyzstan (1.4%). Notably, the Kazakh tenge appreciated slightly by around 1.5% compared to early 2023.

Changes in Price Levels: As of June 2024, inflation rates were as follows: China – 0.2% year-on-year, Russia – 8.6%, Kazakhstan – 8.4%, Turkey – 71.6%, and Tajikistan – 3.5%. In Uzbekistan, annual inflation accelerated to 10.6% compared to June 2023.

Trade Weights of Major Partner Countries: The weight of each trading partner country in Uzbekistan’s external trade volume affects how changes in their currencies and price levels impact the indices of the Uzbek soum’s effective exchange rates. Greater trade dependence on a particular country increases the sensitivity of the soum’s exchange rate to fluctuations in that country’s currency and price changes.

Conclusion: Inflationary trends and changes in exchange rates in China, Russia, Kazakhstan, and Turkey significantly impact the dynamics of the real effective exchange rate index of the Uzbek soum.