Uzbekistan’s economy is mostly cash-based (MAXIM MARMUR)

Tashkent (AFP) – Uzbekistan on Monday issued a new high-denomination banknote, saying it would facilitate big consumer purchases in a country that still shops mostly with cash.

The new 100,000-som note is worth 10.50 euros ($11.90) and is a big step up from the Central Asian country’s previous biggest note of 50,000 som.

The move will make it easier to buy “high-value goods such as automobiles, furniture and appliances,” central bank official Fazliddin Bozorov told local media.

The ex-Soviet nation has an underdeveloped banking system. Salaries, which average less than $200 per month according to official statistics, are often paid in cash. 

Uzbekistan’s central bank released the 50,000-som bill in 2017, after removing controls on its currency.

The exchange rate was then set at 8,100 soms to the dollar, but it has since slipped to around 8,500 per dollar.

Before 2017 the currency was subject to strict capital controls, leading to a wide gap between its official exchange rate and the black market rate.

Exporting firms were forced to sell their foreign currencies at the artificially high official rate, pushing away foreign investment.

The country was unattractive for investors under its previous president, Islam Karimov, who took a conservative approach to external debt and favoured a strongly protectionist economic model that led to economic stagnation. 

Uzbekistan, a country of over 30 million people, depends on commodities such as gold and cotton for economic growth but has looked to diversify since Karimov’s death in 2016. 

Shavkat Mirziyoyev, who served as prime minister before assuming the presidency, has overhauled the foreign exchange system, and the lifting of visa requirements for dozens of countries in a bid to boost tourism. 

Last month the country made a splash with a $1 billion eurobond issue in its first foray into the international debt market.

Disclaimer: This story is published from a syndicated feed. Siliconeer does not assume any liability for the above story. Validity of the above story is for 7 Days from original date of publishing. Content copyright AFP.