Tugrik depreciates sharply amid policy challenge www.zgm.mn
The exchange rate of tugrik has been plummeting versus the U.S. dollar, reaching MNT 2,781.09 on Tuesday. The Bank of Mongolia (BoM) sold USD 72.6 million on the day, making FX market intervention to stabilize the exchange rate. Mongolia faces the policy challenge of strengthening policy credibility to ensure financial stability in these uncertain and turbulent times. However, the gold purchase is increasing monthly as well as its price in the global market. As of March, the central bank purchased a total of 5.3 tons of precious metals, increased by fourfold from 1.2 tons in the same period last year. Of these, 3.6 tons was gold. Countries are immediately taking fiscal and monetary measures to reduce the economic impact of the COVID-19 epidemic. As a result of the crisis, the economies of developing countries in Asia are expected to shrink by at least 4 percentage points by 2020, sending about 11 million people to go under the poverty line, according to the World Bank. The Asian Development Bank (ADB) projected Mongolia’s GDP to grow by 2.1 percent in 2020 and 4.6 percent in 2021. “Growth slowed in 2019 as mining slumped and export expansion moderated. Inflation edged up, and the current account deficit narrowed. Growth is expected to fall sharply in 2020 because of COVID-19 but rebound in 2021 as the outbreak subsides,” emphasized ADB.