Why is this important
Investment expansion is a step towards reducing the risks of currency and interest shocks, and reducing dependence on one market (USA) increases the stability of gold and foreign exchange reserves. Moreover, it shows that Uzbekistan is more actively managing its reserves by applying international practices.
What happened
- The Central Bank has already begun diversification by purchasing US Treasury bonds due to their high liquidity.
- According to Sanjar Valiyev, Head of the Department for the Management of International Reserves, the acquisition of government bonds from other developed countries is being considered.
- The regulator clarifies that it is only about government bonds, and shares of foreign companies are not considered.
- The Central Bank first invested in foreign government securities in May 2024 (approximately $35 million), then purchased US Treasury securities worth $65 million in October; by the end of the year, their volume exceeded $101 million.
- Uzbekistan’s gold and foreign currency reserves reached a record level — over $50 billion, gold was valued at over $40 billion for the first time, and the volume of gold reserves increased from 11.7 to 11.8 million troy ounces.
What they say
In the future, we plan to consider securities of other developed countries as well, — Sanjar Valiyev.
It was also noted that the company’s shares are not included in the CB’s plans, only government bonds.
Context
The trend of Central Bank reserves diversification is growing globally: a decrease in dollar concentration, an expansion of income sources, and a reduction in currency and geopolitical risks. Uzbekistan has not had such experience before; investing in foreign government securities is a new tool for managing reserves. At the same time, it is important to note that deploying such measures requires skills in assessing risks, liquidity, currency choices, timing, and the stability of the economic environment. The Central Bank has already been cooperating with the World Bank in this area.
