UZS Currency: The Economic Symbol of Uzbekistan’s Transformation

What Is the UZS?

The UZS, or Uzbekistani Som, is the official currency of Uzbekistan, a landlocked country in Central Asia with a rapidly evolving economy. Introduced in 1994 following the collapse of the Soviet Union, the UZS reflects both the struggles and aspirations of a post-socialist nation striving for economic modernization and global integration.

Today, the currency is managed by the Central Bank of the Republic of Uzbekistan (CBU), which has played an increasingly active role in currency liberalization and inflation control in recent years.

A Brief History: From Transition to Reform

After gaining independence in 1991, Uzbekistan introduced the Som in 1994 to replace the Russian ruble. However, the early decades were marked by high inflation, currency black markets, and limited convertibility.

For many years, dual exchange rates persisted—an official rate for government transactions and a parallel market rate for businesses and individuals. This created inefficiencies, discouraged foreign investment, and fed corruption.

The Turning Point: Currency Liberalization in 2017

In September 2017, a major milestone occurred: Uzbekistan floated the som, eliminating the dual-rate system. The government allowed market forces to determine the value of the UZS, a move welcomed by both local businesses and international observers.

This reform, along with broader economic liberalization policies, transformed how the som functions in trade, investment, and monetary policy.

Current Exchange Regime and Stability

The UZS now operates under a managed float regime. This means the central bank intervenes when necessary to prevent extreme volatility but does not peg the currency.

As of mid-2025, the exchange rate fluctuates around UZS 12,000–13,000 per USD, reflecting inflation pressures but also increased transparency. While the som has depreciated over the years, this decline has been relatively orderly, supporting export competitiveness while containing inflation.

Key Drivers of UZS Movements

1. Commodity Prices
   Uzbekistan exports gold, cotton, natural gas, and uranium. Global commodity prices significantly influence foreign currency inflows and the som’s strength.
2. Remittances
   Millions of Uzbeks work abroad, mainly in Russia and South Korea. Remittance flows are a major source of foreign exchange, affecting UZS supply and demand.
3. Central Bank Policy
   The CBU has shifted from a directive to a market-responsive approach, adjusting interest rates and reserve requirements to manage inflation and currency pressure.
4. FDI and Economic Reform Pace
   Foreign investors watch the som as a barometer of macroeconomic risk. Sustained reform keeps the UZS more stable, while political uncertainty could trigger volatility

UZS in International Trade and Business

Still a Soft Currency, but Gaining Traction

The UZS is not widely used outside of Uzbekistan and is not fully convertible. However, in recent years it has become easier to exchange, especially with the rise of online banking, digital payments, and improved regulation of forex services.

For international businesses working in Uzbekistan, especially in energy, infrastructure, or logistics, foreign currency accounts and hedging instruments are becoming more accessible, though still developing.

Trade Payment Preferences

In cross-border trade, most Uzbek companies quote in USD or EUR, while local contracts may still be denominated in UZS. As such, exchange rate risk remains a concern, especially for long-term contracts.

However, for importers into Uzbekistan, depreciation of the som can increase costs, especially for products like machinery, medicine, and electronics. Smart businesses must factor currency trends into pricing and payment schedules.

Inflation and Purchasing Power Concerns

Ongoing Inflation Challenges

Inflation has consistently ranged from 9% to 14% annually over the past five years. While this is an improvement compared to the early 2000s, it remains a challenge. The central bank is working toward inflation targeting, but structural factors—such as rising wages, supply chain inefficiencies, and energy prices—still fuel cost increases.

What This Means for the UZS

The value of the som is deeply tied to inflation dynamics. A strong push for price stability is likely to enhance the UZS’s credibility over time, especially as the country moves toward greater openness and private sector expansion.

Digital Future: The Evolving Role of the UZS

Digital Payments on the Rise

Uzbekistan is experiencing rapid growth in fintech and mobile banking. Apps like PayMe, Click, Apelsin, and HUMO have changed how citizens and businesses transact.

The digitization of the UZS is helping reduce the cash economy, improve transparency, and support small business growth. More than 80% of urban payments in Tashkent are now cashless.

Potential for a Central Bank Digital Currency (CBDC)?

Though not officially announced, the Central Bank is exploring CBDC research, in line with regional trends seen in Russia, China, and Kazakhstan. A digital som could support:

• Government benefit transfers
• Rural financial access
• Cross-border remittances

Such an initiative would signal Uzbekistan’s intent to be at the frontier of financial modernization.

Final Thoughts: Is the UZS Becoming a Stable Emerging Market Currency?

The Uzbek som (UZS) tells a compelling story of economic resilience and transformation. From black-market roots to managed float transparency, the currency mirrors Uzbekistan’s broader evolution.

Despite persistent inflation and limited convertibility, the UZS is more stable and trustworthy today than ever before. Reforms, digital innovation, and greater integration with global markets are pushing the som into a new phase.

For investors, traders, and businesses eyeing Central Asia, understanding the UZS is not just about forex—it’s about recognizing a market that’s opening up, one step at a time.

In short, the UZS is not just a currency. It is a signal of economic rebirth, and the world is watching closely.