US dollar surge against tugrug and fuel prices rise
The government and Mongol Bank had set a goal to stabilize exchange rate fluctuation and increase the purchasing power of MNT, but they could not reach these goals in recent year.
Throughout the last months of this year US dollar dramatically rose against tugrug, and the most recently Naiman Sharga Exchange Market traded one USD for 2,680 MNT, which is an all-time high level.
The official exchange rate of US dollar at Mongol Bank was 2,639.21 MNT on December 4, which illustrated the highest exchange rate of Mongol Bank this year.
As tugrug exchange rate decline against foreign currencies, Mongolians have experienced fuel price hikes throughout the latter half of this year.
In October, the Mineral Resources and Petroleum Authority (MRPA) announced that due to the rise in petroleum fuel prices on the world market, Rosneft Oil Company providing Mongolia with fuel raised border fees of gasoline and diesel, which caused Mongolian fuel importers to increase their gasoline and diesel prices. Fuel price were raised four times this year.
The MRPA requested petroleum companies importing fuel from Russia to lower their fuel prices as Rosneft reduced its price in mid-October.
In response to the MRPA’s request, fuel importers agreed to reduce fuel price by 100 MNT per liter on December 7.
The Ministry of Mining and Heavy Industry and MRPA announced that they will take step by step measures to reduce fuel prices in the future.
The government launched a project to build the oil refinery this year to help the country’s economy become less reliant on fuel imports and to stabilize fuel and commodity prices.
In June, Prime Minister U.Khurelsukh attended the ground breaking ceremony of the oil refinery, which is being built in Altanshiree soum of Dornogovi Province.
The refinery will have a processing capacity of 1.5 million metric tons of oil per year and will annually produce 560,000 tons of gasoline and 670,000 tons of diesel fuel, as well as 107,000 tons of liquefied natural gas. India has provided a 700 million USD loan for the oil refinery and 264 million USD for pipelines that will connect oil resources in Dornod Province to the oil refinery. The 20-year loan will have an annual interest rate of 1.75 percent and principal payments will be waived during the first five years.