As of October 2019, official foreign exchange reserves reached USD 4.2 billion, which equals eight months of payment of imports. However, a downward trend has been observed in mining commodities, the main contributor to Fx reserves. In this regard, the Bank of Mongolia (BoM) highlighted a necessity to improve import policy at a recent press conference, delivering a report on timely issues concerning the economy of Mongolia. As of October 2019, money supply reached MNT 20.5 trillion, up 11.7 percent year-over-year and the money supply is mainly formed of tugrik savings, current accounts and savings of foreign currencies. During the period, the central bank has purchased a total of 14 tons of gold. This is a decrease of 4.2 tons compared to the previous year. Mineral royalty fee and government’s strict policy on mineral licenses might be the main drivers of gold purchase decline, said the officials. Despite improving indicators of economy, Mongolia faces major challenges in the mid-term. There is a need to further increase currency reserves considering the instability in the external market, and the repayment of external debt.According to BoM data, the balance of payments surplus totaled USD 264 million in September 2018 and is expected to show positive results this year. Accordingly, Fx reserves may increase significantly. Regarding the recent appointment of the new Governor of the Bank of Mongolia, the officials of the central bank confirmed that the bank will continue to abide by the general directions it has been following in the past three years, aimed at sustaining the economic revival, ensuring stable currency rate of tugrik. Therefore, the policy of restricting the U.S dollar lending might be a major problem for larger enterprises, said Orkhon Onon, Executive Director of Trade and Development Bank (TDB), during BoM’s meeting Foreign Exchange reserve.

Published Date:2019-12-03