Uzbekistan to Issue Larger Denomination Banknotes

[Bimat]

Uzbekistan to introduce new bills

17 January 2018 11:10 (UTC+04:00)

The Central Bank of Uzbekistan is considering to introduce new banknotes with a larger nominal value, the press service of the regulator said in a message.

The bank stated that it is planned to continue work on optimizing the structure of banknotes in circulation within the framework of tasks to improve cash circulation.

"To ensure more convenience of using the national currency, the issue of releasing a banknote with a larger nominal value and the gradual replacement of small bills with new-value coins of 50, 100, 500 soums nominal value, as well as releasing a coin with a nominal value of 200 soums, is being considered," the report says.

Since August 22, 2017, the Central Bank issues banknotes in nominal value of 50,000 soums. So far this is the largest banknote in the country. According to the Central Bank, this was not due to inflation, but it became necessary due to the growth of the average wage in the country.

The official exchange rate for January 17 is 8146.38 UZS / USD

Source: Azer News

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Something more than playing with denominations may be afoot here. Last September, the regime devalued the sum in line with the black market rate, destroying the black market and potentially setting the stage for convertibility. Inflation, historically 6 to 7% seems to have settled below 6%. For a developing country, 5% is a perfectly good inflation rate.

Consider the euro equivalent value of the proposed coin denominations using today's rate of 100 000 sum = EUR 9.98991: UZS 10 is 0.1 eurocent, 50 is 0.5 eurocent, 100 is 1 eurocent, 200 is 2 eurocent and 500 is 5 eurocent. With 5% inflation, only the 500 sum seems sustainable in the future.

However, comparing prices (not wages) when I was in Uzbekistan last spring, my conclusion was that the PPP (purchasing power parity) rate should be (very) roughly around 5500 sum to the euro, compared to the official rate of 4200 and the black market rate of 8000. If so, the official devaluation was far too big. Either the sum should rebound if it is made convertible OR the authorities wanted to create a large artificial advantage for Uzbek exports. The latter option seems more likely, as the main export article is cotton and the country's cotton has a bad image because of child and slave labour charges.

If I am correct in the previous paragraph, it is unlikely that we'll see the 10 and 50 sum coins and even the 200 seems pretty doubtful, because it would incur startup costs.

Peter

[Pabitra]

See

https://www.azernews.az/region/125636.html

[Bimat]

Central Bank of Uzbekistan won't issue new banknote

9/25/2018 7:54:21 AM

(MENAFN - Trend News Agency ) Baku, Azerbaijan, Sept. 25

By Fikret Dolukhanov – Trend:

The Central Bank of Uzbekistan (CBU) did not make a decision to issue a 100,000-soum banknote, the bank's press service announced referring to the joint press conference of the CBU and Qishloqqurilishbank.

'If the country's economy needs such a bill, it will be released. There's no such necessity for now, and all this is just rumors,' the CBU noted.

Some Uzbek media outlets announced on Sept. 25 that a 100,000-soum banknote will be issued in the near future.

Rumors about the new banknote began to spread as early as 2017.

On Aug. 22, 2017, the CBU issued the new 50,000-soum banknotes. They are currently the largest banknote in the country.

(8079.28 soums = 1 USD on Sept. 25)

Source: MenaFM