USD exchange rate skyrockets


The USD exchange rate, which was 1,965 MNT as of the end of June, reached 2,078 MNT on July 28, and 2,145 MNT on August 8, which has concerned many analysts.

As of August 8, the exchange rate was set at 2,138 MNT against USD at Naiman Sharga currency exchange market. Commercial banks and currency exchange centers in Mongolia sold USD for 2,130 to 2,145 MNT.

Observers of the foreign currency swap held on Saturday said the USD exchange rate rose from 2,119 to 2,129 MNT in six hours. Since the exchange rate first exceeded 2,000 MNT, people have started closely observing the foreign currency market, with a focus on the USD exchange rate. Many have complained that the USD is getting close to the EUR, with the exchange rate rising from hour to hour.

The Mongolian public is used to seeing the exchange rate increase ahead of the new academic year, and following an increase in money supply, but many people believe that the record-high exchange rate was influenced by a speech given by Mongol Bank’s President N.Bayartsaikhan about Mongolia’s foreign currency reserves.

During a parliamentary session, N.Bayartsaikhan reported, “Mongol Bank’s foreign currency reserves equal 1.27 billion USD on paper, but in accordance with an agreement with the People’s Bank of China, we made CNY-MNT swap exchanges equaling 1.6 billion USD. If we include this in calculations, this means that Mongolia’s foreign currency reserves now equal -429 million USD.”

Many have said that as dealers at “black markets” believe that Mongolia doesn’t have any foreign currency reserves, they are raising the exchange rate as high as they want.

Even though Mongol Bank reported that it will actively participate in foreign currency swaps in order to ease exchange rate fluctuation resulting from an imbalance between short-term supply and demand, no measures to lower the exchange rate have been put in place yet.


  1. I have been following the exchange rate quite closely for the past year(s). I modeled the forward rates this past February after noting a linear relationship between past gold and silver USD prices and MNT rates to USD since Q1 2013 (Oyu Tolgoi began operations Q1 2013; Chinggis bonds Q4 2012).
    But the formula broke after the June Parliamentary elections and the change of BoM governor in June-July. Since then, the Tugrik rate has vacated its firm adherence to a model which had been in force since Q1 2013. Unlike this article, I do not believe the black market money-changers are in play. I suspect this is a policy move, likely to enrich a select few.
    (Modeling MNT forex here: