In-depth Analysis of Money-Credit Policy of Uzbekistan in 2017

Analysis of Money-Credit Policy of Uzbekistan in 2017
The macroeconomic situation in the country has changed dramatically in 2017. The CBU has taken consistent measures to liberalize the county’s economy, foreign exchange market, and implemented complex and balanced programs to maintain high inflationary pressures in the market.
In the first half of 2017, the national currency exchange rate devalued at a higher rate in order to reduce the negative impact of the real exchange rate of Uzbekistan Sum (UZS) on domestic and foreign markets[ CITATION Rad17 \l 1033 ]. The CBU rated that 1 USD would be equivalent to 8,100 UZS, compared to the previous rate of 4,210 UZS. The main goal of the CBU’s movement was to open the country’s economy and market, attract foreign investment and reduce the financial isolation of the country from foreign exchanges, as well as getting rid of the black market. The black market was widely used by the people of the country due to the restrictions of free money exchange in banks, and with the devaluation of the currency, banks started currency exchange freely, and people started receiving USD in their bank accounts. In addition, the currency liberation triggered a more consistent currency policy which were carried out by businesses. For instance, Uzbekistan Airways stopped selling tickets in USD for foreign nationals and accepting the national currency for all sales[ CITATION Nos17 \l 1033 ]. GM Uzbekistan, the biggest car manufacturing company in Central Asia, also started selling cars in the local market only for the national currency[ CITATION The17 \l 1033 ]. As a result of step-by-step liberalization of foreign trade activities and the improvement of the economic situation with the major trading partners of Uzbekistan, as well as a significant increase in exports of goods and services are expected to be seen.
At the same time, the high rates of devaluation of the UZS exchange rate in January-August 2017 and the increase in the expectations related to the liberalization of the domestic foreign exchange market among the subjects of entrepreneurship have had a beneficial effect on the investment activity in the economy. According to Santander reports (2017), the amount of foreign direct investment (FDI) reached to 2.7 billion USD in 2016, and is expected to be at around 2.65 billion USD in 2017.