Furthermore, the U.S Federal Reserve approach on increasing interest rate in steps is reducing investors’ confidence and raising a risk of investment outflow in developing countries. Due to the decision of U.S Federal Reserve, the 22 foreign exchange rates of Bloomberg FX Fixings have depreciated by up to 50 percent against US Dollars. MNT rate followed the same fate, falling 9 percent against the USD since the beginning of this year.

Regardless, the International Monetary Fund, Asian Development Bank and other international organizations did not lower their 2019 Economic Outlook on Mongolia. Analysts expect the world economy to grow by 3-4 percent next year.

The trade dispute is creating risks to every countries and the Financial Stability Report of the IMF warned that the stock prices of U.S firms stand above the pre-global crisis period and real estates of developed countries, such as Australia and Canada are currently in “a bubble. Plus, the President of European Central Bank Mario Draghi told the media that a crisis situation has been seen in the global economy”.

Considering the current uncertainties in global economy and debt repayments in the upcoming years, the BoM is now holding a policy to create reserves. Accordingly, the foreign exchange reserve of Mongolia has reached a 6-year record last October.
However, the 2019 budget revenue and expenditure has been planned at a record-high amount. Experts are warning that monetary policy will be in a constraint and create more risks as budget investment will support imports, pressuring balance of payment and MNT rate as a result.