As of November 1, 2024, Uzbekistan’s official reserve assets amounted to $43.14 billion (+4.9%), increasing by $2 billion in October, according to the Central Bank of Uzbekistan. This marks another record high since statistics began being recorded in 2013, reports Gazeta.uz.
The Central Bank's reserves have set new records for the fourth consecutive month: they rose by $1.06 billion in July, $1.75 billion in August, $1.98 billion in September, and $2 billion in October.
According to data from the regulator, foreign currency reserves increased by $510.8 million in October 2024, from $8.71 billion to $9.22 billion (there had been a decline of $1.58 billion in June-July due to gold purchases).
However, since the beginning of the year (January-October), currency reserves have decreased by $149.1 million, partly due to the repayment of $500 million in sovereign Eurobond debt issued by the country in 2019.
The physical volume of gold in the reserves decreased slightly by 20,000 troy ounces (622 kg) to 12 million troy ounces (373.2 tonnes).
Despite this, the value of the gold reserves rose by $1.5 billion, from $31.86 billion to a record $33.36 billion. This was due to a 2.3% increase in gold prices in October, from $2,660.5 to $2,721.5 per ounce. On October 30, gold prices surpassed $2,800 per troy ounce for the first time in history.
Additionally, the value of securities in the CBU's reserves increased 2.8 times due to the acquisition of new foreign government bonds, from $35.7 million to $100.9 million. Previously, the regulator had purchased U.S. Treasury securities.
It is noteworthy that the Central Bank of Uzbekistan also includes the assets of the Uzbekistan Fund for Reconstruction and Development (UFRD) in its reserves, which has effectively become part of the state budget. The volume of these assets is not disclosed. The international rating agency S&P Global Ratings previously stated that it excludes the UFRD's assets from the CBU’s reserves because 'the fund’s assets are intended primarily for fiscal, not monetary or payment needs.'
According to S&P, Uzbekistan's usable foreign currency reserves are expected to decrease until 2027 due to anticipated gold price declines and a continued current account deficit.
Monetary gold reserves make up more than 80% of the total foreign exchange reserves of the CBU (currently 77.3%). The CBU has the priority right to purchase gold produced in Uzbekistan. It buys gold with local currency and then sells dollars on the domestic market to offset the impact of its interventions on the Uzbek som.
The foreign exchange reserves of the Central Bank of Uzbekistan play a key role in maintaining the stability of the national economy and financial system. They can be used to support the stability of the national currency through exchange rate interventions in cases of sharp fluctuations, pay external obligations to creditors, cover imports during crises, and serve as insurance against external economic risks.
Reserves act as a kind of 'safety cushion' against external shocks such as sharp changes in prices for exported goods, international sanctions, global financial crises, or currency market fluctuations.
CentralasianLIGHT.org
November 8, 2024