Challenges of foreign exchange reserves growth discussed

2019-12-02 12:45:32

Ulaanbaatar /MONTSAME/. The Bank of Mongolia hosted a discussion with a theme ‘Foreign exchange reserves’ on November 29 with participation of delegates of mining, cashmere and transportation companies with earnings in foreign currencies, business entities, commercial banks, economic research and educational institutions and corresponding government organizations. 

Throughout the discussion held in two parts on foreign exchange reserves and risks, and challenges and opportunities to increase the reserves, the participants agreed on significance of having a balanced policy toward foreign exchange reserves growth and stability of local currency, tugrug. 

Officials of the central bank delivered a report that the sufficient sum of foreign exchange reserves of Mongolia is USD 6 billion, as recommended by the National Security Council of Mongolia. Recently, it was known that in the first half of this year, the total foreign exchange reserves held by central bank was USD 3.7 billion, which is enough to cover imports of 8-9 months.

Despite some improvements in basic economic indicators of Mongolia, there are still several challenges facing the country’s economy, including the instability of foreign markets and pressure posed by repayments of foreign debts. One of many measures to take for those challenges is to raise foreign exchange reserves. 

Delegates of the Development Bank of Mongolia (DBM) who were present at the event informed that the DBM is supporting growth of foreign exchange reserves of the country through export growth. The DBM has rendered funding of over MNT 280 billion  for local producers within the framework of nationwide ‘Cashmere’ program, besides an oil refinery development it has financed.

The delegates also introduced other projects it will be financing for developing export-oriented industry, such as large-scale renovation projects of power plants both in the capital city and rural areas.  Last year, the DBM has issued bonds worth USD 500 million, which they deem as an important step for the foreign exchange reserves growth.