THE IMPACT OF CAPITAL FLOWS ON THE MONETARY POLICY OF THE REPUBLIC OF UZBEKISTAN AND ITS ANALYSIS

This article econometrically analyses the impact of capital flows — foreign direct investment (FDI), remittances, portfolio investments, and external debt — on the monetary policy of the Central Bank of Uzbekistan, based on quarterly panel data for 2016–2024. Using an OLS multiple regression model, quantitative relationships are estimated between monetary indicators — inflation, policy rate, M2 money supply growth, credit-to-GDP ratio, and exchange rate — and capital flows. The results show that remittances have a significant positive effect on lending volume (β = 0.475, p < 0.001) and money supply expansion; FDI inflows demonstrate a negative relationship with inflation (β = −0.312, p < 0.05); and external debt is identified as a risk factor for monetary stability (β = −0.210, p < 0.05). The model explains 89.1% of the variance (R² = 0.891). The study concludes with practical recommendations on transitioning the Central Bank of Uzbekistan to an inflation targeting regime, regulating capital flows, and ensuring exchange rate stability.