4.1 billion USD foreign exchange reserve is sufficient to survive a year, says Mongol Bank

Mongolia had 4.1 billion USD in foreign exchange reserve at the end of March...

Mongolia had 4.1 billion USD in foreign exchange reserve at the end of March. This amount is sufficient to cover a full year’s import demand, according to Mongol Bank.

The COVID19 pandemic has slowed down economies worldwide and caused a downward trend in mineral demand and prices. As a result, Mongolia saw a 42 percent decline in export revenue in the first quarter of 2020, current account deficit amounted to 767 million USD, and balance of payment came out with 350 million USD loss. During this time, Mongol Bank injected 375 million USD to the currency market.

The central bank announced a relatively positive outlook for the foreign exchange situation for the rest of the year.

“Trade and Development Bank has repaid the 500 million USD government guaranteed notes, issued in 2015, with its internal liquidity. Mongol Bank’s negotiation with the People’s Bank of China to extend the swap deal, which expires in July this year. Taking these into account, we doubt the large debts scheduled for payment in 2020 will cause burden,” said Mongol Bank.

Moreover, cost of financing in the international stock market is declining as a result of the COVID19 pandemic. In particular, the US Federal Reserve Bank cut down the benchmark interest rate by a full percentage point, returning to a range of 0 to 0.25 percent, while the US Congress approved a 500 billion USD program to stimulate its economy. These measures helped raise US dollar reserves in the market. Mongolia's biggest exporting partner, China, has managed to contain the spread of the virus and is expected to revive its economy soon.

Mongol Bank added, “Despite the drop in the foreign currency flow to the country, Mongolia can expect favorable impacts to the local foreign currency market from external climate.”

MORTGAGE PROGRAM TO FOCUS

ON TARGET GROUPS

Mongol Bank announced to carry out a mortgage program with eight percent interest rate for target groups this year.

The program has already kicked off and will be implemented until the end of the year. The central bank has deployed financing worth 240 billion MNT to commercial banks within this scope. Reportedly, Mongol Bank made changes to the Mortgage Financing Procedure and signed agreements with banks in accordance with Parliament resolution and law on preventing COVID19 and reducing its negative social and economic impacts.