<h3>"Kursiv" spoke about this with experts</h3> The dollar exchange rate in Uzbekistan jumped sharply on August 10. At the currency exchange (UZCE) trading on this day, the soum depreciated against the US currency by 3.5%. For comparison: throughout 2022, the depreciation was around 4%. "Kursiv" asked experts what will happen to the dollar in Uzbekistan and whether it is necessary to hurry to your bank to transfer money from sum deposits to foreign currency deposits. <h3>Reasons for fall</h3> Among the reasons for the devaluation of the national currency, the Central Bank of Uzbekistan named the fall in the price of currencies of Uzbekistan's key trading partners and a decrease in the inflow of remittances. Avesta Investment Group partner Karen Srapionov clarified in his comment to "Kursiv" that the fall in Russian and Turkish currencies was higher than 40% since the beginning of the year, the yuan - by 7%, and the decrease in remittance inflows for half the year - by 21.2%. The expert explained that less currency enters the Uzbek market from exports. With the price of Uzbek goods in Russia in rubles remaining unchanged, the Uzbek seller began to receive less in dollar equivalent. The devaluation also affected workers going abroad. Alkes Research Investment Banking Director Behruzbek Ochilov added that Russia continues to remain one of Uzbekistan's key trading partners, and migrants' money transfers play a significant role in maintaining Uzbekistan's currency balance. Migrants earn in rubles, and the devaluation of the ruble means that they can buy fewer dollars for them, and consequently send fewer dollars to Uzbekistan for their families. Therefore, the currency in Uzbekistan became smaller and its price increased. Another factor contributing to the devaluation, Behruzbek Ochilov called the recently released data on expenditures exceeding Uzbekistan's budget revenues. The deficit for the first half of 2023 was 6.17% of GDP, which is higher than the 3% GDP norm established by the state budget law. <h3>What will happen to the course</h3> Karen Srapionov believes that it is difficult to make forecasts for the exchange rate against the backdrop of the tense geopolitical situation affecting the economic policy of neighboring countries. "I hope that the Central Bank of Uzbekistan, using its available resources, will try to help the market reduce volatility and continue to gradually change the exchange rate depending on the market situation. But, as mentioned above, sharp political actions in other countries can also affect Uzbekistan, so no one is immune to force majeure," warns Karen Srapionov.&nbsp;Behruz Ochilov added that to forecast the exchange rate of the Uzbek sum, it is necessary to take into account the exchange rate of the ruble and the exchange rate of other major trading partners of Uzbekistan, as well as the trade balance and budget. Therefore, it is difficult to make any predictions. <h3>Withdraw deposits</h3> The partner of Avesta Investment Group believes that when making a decision about your savings, it is important to remember to diversify them. At the same time, dollar deposits at a rate of 5-6%, even with an increase in the exchange rate by 10.7% year-on-year, are still not as attractive as sum deposits at 22-23% interest rates. The expert does not expect a significant decrease in deposit rates or the Central Bank's rate in the near future, taking into account the impact of exchange rate growth on the price increase of imported goods and their impact on inflation. The investment banking director at Alkes Research also believes that soum deposits are more profitable. "Considering that the maximum possible return on a sum deposit is 25%, and on a dollar deposit is 7%, the Uzbek soum will need to be devalued by at least 18% in a year to make a dollar deposit more profitable. I assess the likelihood of such a scenario as low," Ochilov concluded.<a href="https://uz.kursiv.media/authors/vadim-erzikov/">Vadim Erzikov</a>Deputy Chief Editor<a href="mailto:v.erzikov@kursiv.media">v.erzikov@kursiv.media</a>

What will happen to the dollar exchange rate in Uzbekistan?