Uzbekistan’s currency is sliding on the black market, where the dollar-sum rate is volatile following last week’s presidential election.
The black market rate hit a record high of 4,700 sums to the dollar on April 2, the Uzmetronom website reported.
It has since fallen back and was trading at 4,220-4,270 on April 6, a source in Tashkent told EurasiaNet.org. The sum has thus lost between 5 and 7 percent of its value since the presidential election on March 29, when it was trading at 4,000-4,100 to the dollar.
The divergence between the official and black market exchange rates has grown exponentially in recent weeks: Traditionally, the sum has traded for around one-third more on the black market, but the gap is now around 66 percent. The National Bank of Uzbekistan is selling dollars for 2,540 sum, according to its website.
One possible explanation for the sum’s decline is that it is mirroring the trajectory of Russia’s ruble, which has caused currencies across Central Asia to plunge in value. A drop in remittances sent home by labor migrants in Russia owing to the economic crisis there is another possible reason: Remittances from Russia to Uzbekistan fell by 15.5 percent last year, according to data recently released by Russia’s Central Bank, which means fewer dollars circulating in the economy.
Uzmetronom speculated that the currency was just settling at its real market value, and predicted that the rate could hit new highs of 5,000-5,500 sums to the dollar by summer.
Uzbekistan has long had a thriving black market, which is believed to be controlled by powerful players who make enormous profits on the difference between the official and black-market rates. A high-profile crackdown in 2013, when balaclava-clad security forces raided bazaars and rounded up illegal currency traders, was short-lived, and the black market continues to flourish.
Joanna Lillis is a journalist based in Almaty and author of Dark Shadows: Inside the Secret World of Kazakhstan.
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