The value of Uzbekistan’s national currency spiked sharply over the weekend in a development that some have linked to the unfolding corruption scandal involving GM Uzbekistan.
Traders on the black market in the capital, Tashkent, were buying dollars for around 5,500 sum on May 15, up from around 6,400 sum in the days before. They were selling dollars for around 6,000 sum. Rates in the capital typically set the pattern for the rest of the country.
The sudden change in fortunes of the sum has come as something of a shock to small and medium-scale businesses.
Umid, a market trader who rents a small stall from which he sells ice-cream, drinks and fast food snacks, said that he pays $400 in rent every month.
“For me it’s good when the exchange rate is low, since I have to spend much less on buying dollars. The question I have is: How long is this going to last?” Umid told EurasiaNet.org.
Firuze sells clothes imported from Turkey at her stall at the Ippodrom wares market. With the dollar rate dropping, Firuze said she had decided to close up shop for a while.
“The drop in the exchange rate is profitable to those that earn their money in sum, but those who make their money in dollars don’t see any benefit,” she said.
The speculation in Tashkent markets is that the sudden change in the fortunes of the national currency is somehow related to an ongoing corruption scandal involving senior management at carmaker GM Uzbekistan — a joint venture between Uzbekistan’s UzAvtosanoat (75 percent) and US giant General Motors (25 percent).
Prior to the scandal, GM sold some of its cars in dollars, which drove up local demand for the US currency. Now, however, payment is made in sum, which has led naturally to a fall in the desirability of the dollar.
An investigation into GM Uzbekistan has led to so far to the detention in late April of the company’s general director, Tohirjon Jalilov, and the questioning of deputy prime minister Ulughbek Rozikulov. Although little is being made officially public about the case, it is understood that the main charges center around an alleged scheme to resell cars intended for export on the local market. Since the vehicles sell for higher prices in Uzbekistan than in Russia, where the GM Uzbekistan exports much of its goods, it is believed the management were pocketing the difference.
The cars involved in the alleged scheme may have numbered in the multiple thousands, so the suggestion that a sudden drop in dollar transactions for GM Uzbekistan vehicles has caused a knock-on effect in the currency market may not be such a stretch.
Still, black market currency traders in Tashkent are, according to bazaar workers, holding onto their dollars in the expectation of another swing back to a depreciated sum.
Anvar Nazirov, a Tashkent-based economist, suggested that the sudden drop of the dollar could be linked to another two factors: the shortage of cash in the Central Bank’s reserves or an intentional ploy by speculators controlling the black market.
“When the rate is low, the big players on the black market buy up currency in large amounts and then sell once they’ve hiked the rate,” Nazirov said.
This is all, of course, a vivid reminder of the artificiality of the official rate, which stands at 2,900 sum to the dollar.
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