Enkhjin: Government should refinance its debts www.zgm.mn
Director-General at Reserve Management Financial Markets Department of the Bank of Mongolia (BoM), Enkhjin Atarbaatar talked about the current situation in the foreign exchange market of Mongolia and Fx price
-What main drivers are triggering the price of Mongolian tugrik against the U.S dollar?
-In the long term, Mongolian tugrik’s exchange rate against other currencies has devalued. One of the main reasons is that income in foreign currency exceeds foreign currency expenditure. The country has been settling the loss of income and expenses by lending from the foreign market. As a result, the foreign debt of Mongolia reached over USD 30 billion. It is necessary to increase the exporting products produced in Mongolia and to grow foreign exchange revenues by selling services such as tourism and information technology in the global markets.
-What will be the central bank’s statement on the currency depreciation?
-Well, it is important to focus on the period in which the exchange rate weakens. Mongolia has a small and open economy. Following the fact, the exchange rate affects inflation and financial stability. The central bank immediately plays its role when temporary depreciation occurs in the market.
-Majority of the economists agree to increase foreign exchange reserves while some are against it. How is the BoM’s verdict on it?
-Mongolia is scheduled to repay about USD 14 billion as a part of foreign debt. Considering the current economic situation, the country needs to extend the debt term. If Mongolia’s economy and foreign currency stay stable, the debt can be refinanced with a lower interest.