World Bank Expert Calls for Flexible Exchange Rate in Uzbekistan

World Bank senior country economist Pinar Yasar advised Uzbekistan to allow its exchange rate to float freely while using central bank interventions solely to smooth extreme swings. Speaking at a panel on monetary policy, she stressed that maintaining credibility under an inflation-targeting framework requires clear rules, disciplined intervention and close alignment of monetary and fiscal policies.

Yasar highlighted that interventions should focus on market functioning rather than defending a specific currency level. She warned that heavy-handed attempts to fix rates, as seen in Russia in 2014 and Kazakhstan in 2015, can deplete reserves, increase volatility and reduce confidence.

Yasar emphasised: «Intervene only in cases of excessive volatility, and avoid opaque or level-defending actions, because these will erode credibility and burn resources.»

She praised Uzbekistan’s reforms since 2017, including liberalising and unifying the exchange rate system. These reforms have strengthened market credibility and absorbed shocks while allowing the policy rate to remain as the main monetary signal. Yasar also emphasised the importance of engaging with the private sector, publishing relevant data and communicating transparently to avoid misperceptions about central bank actions.

Kursiv also reports that the IMF has recommended that Uzbekistan accelerate reforms in its financial sector.