As reported by Mongol Bank, as of November 31, the nation’s monetary reserves have reached 1.30 billion USD, a 25.4 percent increase compared to October.
Mongol Bank has explained that the increase in currency reserves can be attributed to their new policy on increasing gold deposits. As the inflow of foreign currency has declined, Mongol Bank implemented a policy to increase gold deposits, which has yielded results. The 1.30 billion USD in reserves is only a 1.45 percent increase compared to the beginning of 2016, and a 10.6 percent decrease compared to last year. However, the 25.4 percent increase is seen as a positive trend that will help alleviate the dramatic surge in currency exchange rates.
In order to increase gold deposits from individuals and companies, Mongol Bank helped amend the Natural Resources Law, lowering the gold mining royalty from five percent to 2.5 percent until 2019. The central bank says the decision has resulted in gold deposits reaching unprecedented levels, with 17.6 tons of gold deposited to Mongol Bank in the first 11 months of 2016. The value of the 17.6 tons deposited equals 650 million USD, accounting for 60 percent of the bank’s currency reserves.
As Development Bank of Mongolia prepares to make repayments for 580 million USD in Euro bonds on March 21, Mongol Bank is also bracing for an increased outflow of currency. Mongol Bank says it has worked to further increase the volume of gold deposits, and announced that they will be buying domestic gold at prices set by the London Metal Exchange. Previously, Mongol Bank deducted 2 USD from market prices to cover administrative expenses and refining costs.