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Europe, Forex

Uzbek floats sum currency, Tajik somoni falls after rouble slides

(Adds Uzbekistan scrapping limits on exchange rate movements)

TASHKENT/DUSHANBE, Aug 20 (Reuters) – Uzbekistan floated its sum currency and neighbouring Tajikistan allowed its somoni to weaken on Tuesday after the Russian rouble hit a six-month low.

The sum’s official rate fell 3.4% to 9.384 per dollar after Uzbekistan’s central bank said it was scrapping a five percent limit on daily exchange rate movements and would allow them to be determined purely by supply and demand.

The official rate of the Tajik somoni fell 2.7% against the dollar on Tuesday to 9.70 per dollar, the biggest adjustment in more than two years which the central bank there said was due to pressure from the market.

Both countries’ economies depend to a large extent on remittances from migrant labourers working in Russia, making them sensitive to the movements of the Russian rouble which hit a six-month low on Monday.

The Uzbek central bank said it noted increased volatility and would closely monitor the market and take measures to soften external shocks while working with the government to contain fiscal and monetary expansion.

Despite the pressure, it said in a statement it would press ahead with further liberalisation and allow banks to sell cash foreign currency at exchange kiosks, which could previously only conduct transactions using bank cards. (Reporting by Nazarali Pirnazarov in Dushanbe and and Mukhammadsharif Mamatkulov in Tashkent Writing by Olzhas Auyezov; Editing by Subhranshu Sahu)

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