Article Summary Citing Excessive Currency Regulation Under the Nation's Previous Regime,Uzbekistan's Recently

question 107

Multiple Choice

Article Summary
Citing excessive currency regulation under the nation's previous regime,Uzbekistan's recently elected president,Shavkat Mirziyoev,announced a 50 percent devaluation of the Central Asian nation's currency,the soum,in September 2017.The devaluation changed the official exchange rate from 4,210.35 soum per U.S.dollar to 8,100 soum per U.S.dollar,putting it in line with the black market exchange rate.Economic slowdowns and falling currency values in China,Russia,and Kazikstan,Uzbekistan's largest export markets,have hurt this nation's economy which depends on commodity exports and remittances.According to Oleg Kouzmin,an economist at Renaissance Capital in Moscow,"The decision … helps reduce extreme disparities between official and 'grey market' exchange rates that were witnessed in Uzbekistan in the previous years.Economists generally love to see devaluations -- one of the things than makes them different from politicians -- devaluation always gives the country a chance for a fresh start."
Source: Ksenia Galouchko "This Currency's Sudden 50% Devaluation May Attract Bargain Hunters," bloomberg.com,September 5,2017.
-Refer to the Article Summary.All else equal,a depreciation of the Uzbekistani soum relative to a currency such as the U.S.dollar should ________ the current account balance in Uzbekistan and therefore ________ the financial account balance in Uzbekistan.

• A)increase; increase
• B)increase; decrease
• C)decrease; increase
• D)decrease; decrease

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