Uzbekistan’s central bank has reiterated that the som’s exchange rate will be left to market forces, arguing that a ‘free float’ is key to its inflation-targeting framework.
In a statement released this month, the Central Bank of Uzbekistan said the exchange rate should be treated as an indicator, not a policy target. Attempts to hold the currency at a chosen point, it warned, can build pressure that later unwinds in sharper moves.
Any foreign exchange operations, it added, would be aimed at smoothing excessive, short-term volatility, rather than steering the market.
The stance continues a shift that began with the 2017 liberalisation of the currency market, which gave more access to foreign exchange, and narrowed the gap between official and black market rates.
Recent fluctuations in the som have been closely watched. An earlier report on why the som has held up at times pointed to remittance inflows, export earnings and a tighter domestic monetary stance.
Uzbekistan adopted inflation targeting in 2020, using the policy rate as its main lever. The central bank has kept the key rate at 14% since December 2025. It is due to review it again on January 28.
In its monetary policy guidelines for 2026–2028, the bank projects headline inflation easing to about 7% by the end of 2026 and returning to a 5% medium-term target in 2027, assuming monetary conditions remain restrictive, and external price pressures fade.
A floating rate can cushion swings in commodity prices, remittances and trading partner demand. But it also passes currency shifts more directly into the cost of dollar-priced imports, from consumer goods to industrial inputs. That risk is heightened when energy shortages and higher fuel costs feed broader price pressures, as described in coverage of the region’s growing energy deficit.
International lenders have broadly backed Uzbekistan’s direction, while urging deeper reforms. In late 2025, the IMF welcomed greater exchange-rate flexibility and called for continued structural changes, according to its latest review.
