On October 3, the Uzbek Republican Currency Exchange (UZCE) presented the launch of trading with US dollar futures linked to the national currency (Uzbek som).
«We spent two years on the development of the new tool. It was ready by this June and until recently we had tested the tool in conjunction with 13 commercial banks. Later, we are going to launch similar futures linked to other foreign currencies,» said Sirojiddin Baymetov, a senior broker in the UZCE.
He also noted that the presentation of the tool is symbolic because there were no such hedging products in Uzbekistan before. With help of these futures banks or other entities will be able to buy or sell a certain amount of foreign currency on a certain day in the future at a fixed price.
«For example, a bank has an agreement when it must pay in US dollars by certain amounts of money within a longer period. This means that this bank will need these dollars in the future. In order to mitigate exchange rate fluctuation risks, this bank can make a kind of a reservation for a certain amount of money,» Baymetov explained.
However, he admitted that futures might be useful not only for hedging but for price-gouging as well. The currency exchange at the UZCE grew by 56% over the first eight months this year ($18.6 billion). This is about 50% of the total amount of trade on the exchange.
