Mon­go­lia’s for­eign ex­change re­serve sur­passes 2 bil­lion USD af­ter Gerege Bond


Mon­go­lia’s for­eign ex­change re­serve in­creased to two bil­lion USD with the trans­fer of the 800 mil­lion USD Gerege Bond on Novem­ber 1, the cen­tral bank re­ported.

In May 2017, just af­ter the ap­proval of the ex­tended fund fa­cil­ity, the cen­tral bank stated its goal to in­crease the for­eign ex­change re­serve of the na­tion to 1.6 bil­lion USD by the end of 2017, and ul­ti­mately, to four bil­lion USD by 2020.

The re­serve in­creas­ing to two bil­lion USD ahead of sched­ule by Novem­ber sig­nals a po­ten­tial ap­pre­ci­a­tion in the value of the MNT as the flow of for­eign cur­rency rises.

For­eign ex­change re­serves are re­serve as­sets held by a cen­tral bank in for­eign cur­ren­cies, used to back li­a­bil­i­ties on their own is­sued cur­rency as well as to in­flu­ence mone­tary pol­icy.

The cen­tral bank re­ported that it has been in­creas­ing its for­eign ex­change re­serves steadily in the last year. The surge in Mon­go­lia’s main ex­ports, cop­per and coal, re­sulted in the to­tal ex­port vol­ume to reach 4.3 bil­lion USD in Septem­ber. The 32 per­cent in­crease in ex­ports helped Mon­go­lia reach a sur­plus of 201.9 mil­lion USD in its bal­ance of pay­ments.

In ad­di­tion, Mon­gol Bank has been re­ceiv­ing the pre­lim­i­nary trans­fers of the to­tal 5.5 bil­lion USD fi­nan­cial pack­age part of the IMF pro­gram.

The main fac­tor for the in­crease, how­ever, was the trans­fer of the 800 mil­lion USD Gerege Bond to Mon­gol Bank. The 5.5-year bond with a 5.625 in­ter­est rate was is­sued in late Oc­to­ber and trans­ferred to Mon­go­lia on Novem­ber 1.

Gold sales to Mon­gol Bank in­creas­ing to 16.8 tons has also been a con­tribut­ing fac­tor to the in­crease in the re­serve.

The cen­tral bank re­mains con­fi­dent that the for­eign ex­change re­serve will in­crease fur­ther. With Mon­gol Bank hav­ing ex­tended the 15 bil­lion RMB swap agree­ment with the Peo­ple’s Bank of China by three years and re­fi­nanc­ing all other ex­ter­nal debt and bonds has helped Mon­go­lia post­pone all debt obli­ga­tions to 2021.

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