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Uzbekistan To Liberalize Currency Regulations Starting September 5

A currency exchange office in Uzbekistan
A currency exchange office in Uzbekistan

Uzbekistan says it will liberalize its currency regulations, no longer fixing the som to the U.S. dollar and removing restrictions on the amount of foreign currencies individuals and companies can buy.

The government in a website posting on September 3 said the move would take effect on September 5.

Reports said last week that the currency actions were imminent.

The government decree said that instead of automatically pinning its currency -- the som -- to the U.S. dollar, it would allow its value to be determined by market forces.

Islam Karimov, the ex-Soviet republic’s first ruler under independence, had pinned the value of the som to the dollar.

But the policy has led to a flourishing illegal market as the difference between the official exchange rate of 4,210 soms to the dollar has soared on the black market.

Banking sources told Reuters that the initial rate would be set slightly above the black-market rate, currently about 7,700 soms to the dollar.

The decree said the existing foreign-currency regulations "created an inefficient system of privileges and preferences for individual industries and business entities."

It said the central bank would still have the responsibility of maintaining the som’s stability, but it did not specify how that should be accomplished.

In addition, citizens and organizations will be able "without limitations, to purchase foreign currencies in commercial banks for use in regular international transactions," it said.

In August, Uzbekistan had dropped a regulation that required exporters to sell one quarter of their hard-currency revenue to the government.

The moves come as President Shavkat Mirziyoev, who replaced Karimov after his death was announced in September and was subsequently elected, has taken steps to reduce the isolation of the Central Asian country of some 30 million people.

With reporting by AFP and Reuters
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