Foreign reserves down after 157 million USD intervention

The foreign exchange reserve managed by Mongol Bank is currently at 2.89 billion USD, down 3.8 percent since the beginning of 2018. The decrease was mainly due to a 157 million USD market intervention by the central bank after a rather significant depreciation of the tugrug by 80 MNT in September. Compared to August, the reserve has increased by 1.4 percent. The central bank has included increasing its reserves as a key priority in the 2019 monetary policy guideline. Initially, Mongol Bank had set a goal of increasing reserves to four billion USD by 2020 when the IMF program was kicked off.

Now, according to reports, the central bank has set sights on boosting reserves to six billion USD, double the current amount. A key part of this effort has been to increase gold purchases by the central bank. This year, gold sales alone is expected to add 760 million USD to the reserves.

In terms of significant inflow of foreign currencies, Development Bank of Mongolia recently raised 500 million USD in its first independent capital raising without Cabinet backing on the international market. In addition, IMF is set to transfer 36 million USD as part of the successful approval of the fifth review of Mongolia’s extended fund facility. Additional funding from the Asian Development Bank is also expected to come in by the end of this year. As a result, the central bank believes that the foreign currency reserves are likely to increase.