Mongol Bank: Mongolian to USD exchange rates will decrease

The Mongol Bank has made a currency swap contract with the China Central Bank to support Yuan procurement.

This new contract will allow the Mongolian Government to trade in Yuan, facilitating trade with its closest neighbour and most important trading ally.

This landmark and much delayed agreement means that Mongolia is stepping closer to the global market place by allowing it to trade in new currencies.

Today, over 80% of foreign trade within Mongolia is carried out in United States Dollars, this places too much of a reliance on the USD rates and puts our own economy at risk. The Mongol Bank believes that by signing this contract with China, we will decrease our USD reserves and it is likely that the dollar will decrease leading to a lower exchange rate.

To clarify the situation, we had a brief interview with the Vice President of the Mongol Bank, Mr.B.Javkhlan.

Could you tell me what are the advantages of signing this contract with China?

-We do 80% of foreign trade with the American dollar. This contract will reduce this volume and diversify our own currency portfolio. Mongolia has a lack of Yuan which means that we have a very unstable exchange rate. It will now be possible to carry out increased trade with China in their own currency, thereby stabilising the exchange rate and benefiting our own traders.

-Will this decision modify the dollar exchange rate?

-Well the exchange rate will not change drastically today or even tomorrow, we are likely to see a decrease in the rates within a few months.

-Dollar exchange rate has decreased from yesterday. Is that because of this contract?

-The increasing dollar exchange rate was a bubble, it was a fake exchange rate and the rate is now seeing a correction.

Source : GOGO

Comments

Popular posts from this blog