The new Foreign Currency exchange Policy of Uzbekistan

The new Foreign Currency exchange Policy of Uzbekistan has been announced September 4 evening and effective as of September 5.

Official exchange rate of Uzbekistan Som per 1 US Dollar has been changed from previous 4,200 Som to 8,100 Som and will be announced every Monday by Uzbekistan Government as per market analysis.

Basically, Previous restricted US Dollar exchange policy will be changed as limited liberalization.

Almost 2 times higher previous official Exchange rate has been adjusted as unofficial market exchange rate level and limiting the settlement of taxes, goods and services such as customs duties by Uzbekistan Som only, it absorbs the US Dollar that has been released to the Uzbekistan domestic market and unifies the settlement currency for all domestic goods into som.

Ultimately, it seems to be aimed at gradually diluting the necessity of US Dollar and securing the US Dollar from Uzbekistan domestic market then using it for national economic development.

US Dollar holders can sell dollars at a higher exchange rate than the market, and companies or individuals who need dollars can buy dollars with plastic cards (Visa or Master) instead of cash.

However, Uzbekistan government restricted the use of the US Dollars only for overseas such as export or import amount settlement and overseas business trip. At the same time, the forced sale of dollars which was applied to exporters was suspended while illegal US Dollar exchange markets will be strictly reinforced by Uzbekistan government in all Uzbekistan cities.

Regarding inflation that seems to be a problem, various bills such as mobile phone and internet service, GM Car price which were announced in USD were fixed at the previous exchange rate of 4,200 Som e likely to be problematic, various utilities such as mobile phones and Internet services, which were announced in USD during this period, and Som prices for GM cars were fixed at the previous exchange rate of 4,200 Som. 

However, the precise guidelines have not been announced yet, but the cost of the new exchange rate increases by nearly double, so the government will set a suitable guideline to minimize confusion and stabilize the economy.

Expected impact on our business are as follows;

1.   State own companies (GMUZ, SAMAVTO, UZ-MAN, GMPTUZ and etc.)

1 US Dollar was exchanged at 4,200 SOM but 8,100 SOM required to get 1 US Dollar while Uzbekistan Government fixed the price of the car at the exchange rate of 1 US Dollar at 4,200 SOM after exchange rate policy change. Therefore, serious shortage on Uzbekistan Som and huge minus profit is expected. State owned companies should have contingency plan but their business will be in troubel very seriously.

2.   Normal Private companies (Artel, Companies Group, Dealers of Samsung Electronics and etc.

Unlike in the past when US Dollar was raised in the unofficial exchange market with considerable risk, it is now expected that exchange will be possible as official.

Expected to be active in Import/Export activity.