New record: Uzbekistan’s gold and foreign currency reserves exceed $43 billion
Uzbekistan’s gold and foreign currency reserves rose by another $2 billion in October, reaching $43.1 billion, driven by rising gold prices. This marks the fourth consecutive month of record highs, as the Central Bank sold a small amount of precious metal and invested in securities.
Uzbekistan’s official reserve assets reached $43.14 billion as of 1 November, marking a 4.9% increase with a $2 billion rise in October, the Central Bank said. This is the latest record high since statistics was opened in 2013.
The Central Bank’s reserves have set new records for four consecutive months: up by $1.06 billion in July, $1.75 billion in August, $1.98 billion in September and $2 billion in October. Since the beginning of the year, reserves have grown by $8.58 billion (24.8%).
Data from the Central Bank shows that foreign currency reserves rose by an additional $510.8 million last month, from $8.71 billion to $9.22 billion. In June and July, there was a combined decrease of $1.58 billion due to gold purchases.
However, foreign currency reserves decreased by $149.1 million from January to October, partly due to the repayment of a $500 million sovereign eurobond issued by the country in 2019.
The physical volume of gold in reserves slightly decreased again by 20,000 troy ounces (622 kg) to 12 million troy ounces (373.2 tons).
Nevertheless, the value of gold reserves increased by $1.5 billion, from $31.86 billion to a record $33.36 billion. The increase was driven by a 2.3% rise in gold prices in October, from $2,660.5 to $2,721.5 per ounce. On 30 October, gold prices surpassed $2,800 per ounce for the first time in history.
Additionally, the value of the Central Bank’s securities holdings increased 2.8 times due to the purchase of new foreign government bonds, from $35.7 million to $100.9 million. Previously, the Central Bank had invested in U.S. Treasury securities.
It is worth noting that the Central Bank’s reserve figures also include the assets of the Uzbekistan Fund for Reconstruction and Development (UFRD), sovereign fund which has effectively become part of the state budget. The fund’s size is not disclosed. International credit rating agency S&P Global Ratings previously stated that it excluded UFRD assets from the Central Bank’s reserves, as “the fund’s assets are primarily intended for fiscal rather than monetary or payment needs”.
According to S&P's assessment, Uzbekistan’s usable foreign exchange reserves will decline through 2027 due to an expected fall in gold prices and ongoing current account deficits.
The Central Bank’s (holdings of monetary gold constitutes more than 80% of total usable reserves. The regulator has priority rights to purchase gold mined in Uzbekistan. It purchases the gold with local currency, then sells US dollars in the local market to offset the effect of its intervention on the Uzbek soum.
Source: https://www.gazeta.uz