In the first quarter of this year, demand for foreign currency in Uzbekistan reached $14.6 billion, a 24% increase compared to the same period last year, according to the latest review by the Central Bank of Uzbekistan.

The supply of foreign currency amounted to $12.2 billion, up 27% year-on-year, excluding central bank operations.

Legal entities remained the main buyers of currency. In January–March, their demand rose by 23% year-on-year, significantly outpacing supply growth.

The regulator attributed the increased demand from businesses to rising economic activity, including stronger investment and consumer demand, which led to an expansion of imports. In particular, there was a growing need to finance foreign trade operations, as well as imports of equipment, raw materials, consumer goods, and medicines.

Against this backdrop, the domestic currency market saw a trend of weakening in the national currency's exchange rate.

Sources of currency supply included export revenues, external borrowings by banks, and international remittances. Remittance inflows reached $3.8 billion, up 13% year-on-year.

Additional supply came from household operations: individuals sold $6 billion in foreign currency to banks, 1.5 times more than last year. Purchases amounted to $3.2 billion, up 31%. As a result, the net surplus reached $2.9 billion.

A significant portion of the purchased currency was directed to imports: about 47% for equipment, raw materials, and industrial goods; 29% for repaying foreign currency loans; roughly 20% for consumer goods and medicines; and about 1% for repatriation of foreign investors' income.

Despite rising demand, increased currency inflows helped avoid sharp exchange rate fluctuations. In Q1, average daily volatility was around 0.2%, compared to 0.1% a year earlier.

Source: kun.uz