Interest rates falling in banks: National currency deposit rates decline for 5th consecutive month

The downward trend in interest rates on time deposits in the national currency continues within Uzbekistan's banking system. According to the latest reports from the Central Bank and the financial market, the weighted average rate on time deposits in soms decreased from 17.5 percent in July to 17.2 percent in August. Notably, the yield on individuals' deposits in the national currency has been dropping at an accelerated pace for the fifth consecutive month: while the figure stood at 18.9 percent in July, it shrank to 18.4 percent by the end of August.

For comparison, higher rates on public deposits were last observed 5.5 years ago—in February 2021. Meanwhile, the situation in the corporate deposits sector remains relatively stable (15.4% in July and 15.5% in August). At a time when national currency interest rates are becoming cheaper, foreign currency deposits showed opposite growth, reaching 5.5 percent in August—the highest maximum result recorded since June 2024.

"5 consecutive months of decline, the 18.4% threshold, and the currency spike": 5 key points of the deposit market

The most important official indicators regarding financial market and bank deposit dynamics:

• 5 consecutive months of decline in public deposits: Individuals' deposits in soms dropped from 18.9% in July to 18.4% in August;

• Total time deposits dropped to 17.2%: The average rate for all time deposits in the national currency made up 17.2% in August;

• Stability in the corporate sector: Rates on legal entities' funds in the national currency rose slightly from 15.4% in July to 15.5% in August;

• 2-year record in foreign currency deposits: Foreign currency deposits rose to 5.5%, reaching the highest level since June 2024;

• Foreign currency earnings of the population and business: Public foreign currency deposits increased to 5.4%, and corporate foreign currency deposits rose to 5.7%.

Comparative analysis of deposit interest rates in Uzbekistan's banking system (July — August)

Table of dynamics of time deposits in national and foreign currencies by category:

Economic and financial expertise: Why are deposit interest rates falling and what does this mean?

Conclusions of banking sector experts, economists, and financial analysts:

• "Increased liquidity and containment of inflation": The growth in the volume of funds in soms at banks and the relative stabilization of inflationary expectations are reducing banks' need for expensive national currency resources; this naturally leads to a decline in deposit rates;

• Foundation for cheaper loans: The drop in deposit interest rates lowers the cost of banks' resource base, which in turn serves to gradually decrease loan rates offered to the public and businesses in the future;

• Activation of foreign currency deposits: The rise of foreign currency rates to 5.5 percent indicates banks' increased interest in attracting foreign currency from the public and organizations to finance foreign trade operations and currency projects.

In your opinion, if deposit interest rates in soms continue to fall, is it still profitable to keep savings in the national currency, or is it time to switch to foreign currency? How has the drop in bank deposit rates to 18.4 percent affected your financial plans? Leave your personal thoughts in the comments and share this important financial analysis for proper money management with your loved ones!