Monetary policymakers have spent a total of USD one billion since the beginning of this year to stabilize the devaluation of Mongolian tugrik. The central bank traded USD 36.3 million on Thursday. The foreign exchange market remains fragile despite the interventions in the last four months as the pandemic impact to markets has been reflected in foreign exchange. The deficit of the balance of payments (BoP), which had a surplus a year ago, exceeded USD 80 million. Contracting investment, a 44 percent drop in exports, a trade deficit of USD 176 million, and a 14 percent decrease in imports have played a key roll in BoP loss Moreover, external debt repayments and high debt risk continue to affect the exchange rate. Mongolia’s total external debt has increased tenfold in the last 10 years, reaching USD 29.9 billion. In particular, it accounts for 220 percent of GDP. The country is expected to repay foreign debt worth USD 14-15 billion in 2020-2025, which is three times higher than the current official foreign exchange reserves of Mongolia. The election, which will be held in June, may also lead to unprecedented depreciation of the tugrik against the U.S dollar. Over the past three months, the tugrik briefly fell by MNT 35 against the U.S dollar, standing at MNT 2,788.46. According to the National Statistics Office (NSO), at the end of March 2020, the time deposit in domestic currency reached MNT 10.7 trillion, down by 4.2 percent or MNT 465.4 billion from the same period of the previous year. However, deposits in foreign currency amounted to MNT 3.7 trillion, increasing by 27.2 percent or MNT 789.4 billion year over year.

Published Date:2020-05-03