Policy Rate to remain unchanged

At its meeting on October 21, the Mongol Bank’s Board of Directors reached a decision not to change the Policy Rate. According to the National Statistical Committee, inflation had stood at 10.6 percent throughout the nation and at 10.9 percent in Ulaanbaatar by September. After showing faster growth during the first half of this year, inflation has declined from the 3rd quarter. The Bill on the 2011 State Budget is under the discussion at Parliament. 

Mongol Bank’s Monetary Policy 
At the press conference held on October 22, D. Boldbaatar, Director of the Mongol Bank’s Monetary Policy Department, D. Ganbat, Director of the Supervision Department and G. Delgermaa, Director of the Foreign Currency and Economic Department, responded reporters’ questions.
-When the Togrog rate has appreciated, imports will increase while exports will decrease. What measures are planned to avoid the Togrog rate’s appreciation?
-If the Togrog rate appreciates much without integrity according to basic economic indicators or due to the effects of unproductive currency inflows it will have the consequences of: weakening competitiveness for various sectors except for mining; negatively affect Mongolia’s sustainable economic growth; lose foreign trade balance sustainability; and encourage ineffective imports. Expectation and appreciation of currency rate must accord with basic macro-economic conditions and the Mongol Bank believes it is unnecessary to apply regulations in case the rate remains stable. However, if there is pressure for the Togrog rate to appreciate due
to the abovementioned reasons, the Central Bank will regulate by its rates policy. Not only the Central Bank’s, but also the Government’s policy and guidelines on managing mining income at foreign market levels so as to ensure budgetary discipline, are important to correctly regulate unproductive or huge mining income.
-This year, gold sold to the Central Bank did not reach 2 tonne. What policy will be applied to fix this?
-As at the first 9 months, the Central Bank had bought 1.7 tonne of gold from gold extraction companies and individuals, a decrease of 2.3 tonne or 57 percent against the previous year. Other companies, except for gold exporter Boroo Gold Company, had extracted 2 tonne of gold during the first 9 months of 2010, a decrease of 54 percent against the previous year. This decrease in gold extraction had influenced the volume of gold sold to the Central Bank.
-How will the world market gold price-up affect Mongolia?
-As at October 20, the per-ounce price of monetized gold had reached USD1340.5 on the world market and is expected to have a positive effect, increasing Mongolia’s gold exports and reducing losses in foreign trade and operational balances.
-How many tonnes of gold does Mongolia sell annually on the world market?
-During 2008-2010, Mongolia on average sold 7 tonnes of monetized gold annually on the world market. In its Annual Report, the Central Bank will release official information as to what tonnage of monetized gold was sold on the world market this year.
-It is said that some countries are buying gold as protection against crises. Is this the best protection?
-It is true that some countries are raising the percentage of gold in foreign currency reserves at their central banks. This aims to maintain the value and protect the reserve from rate fluctuation risks. It is noted that gold
prices rise when unstable conditions existed in the global financial market.
Central Bank to encourage sustainable economic growth next year 
The Mongol Bank plans to ensure macro-economic and financial stability for next year and to stimulate sustainable mid- and long-term economic growth.
Within its Monetary Policy, the Mongol Bank will adhere to a policy of ensuring sustainable economic growth in the mid-term and to avoid exceeding a single-digit inflation rate. Moreover, it intends to collaborate with the Government and Financial Regulatory Committee so as to: scrutinize and create long-term resources in the financial market; expand the capital market; and use the Banking Sector’s accumulated money efficiently for economic development.
The Central Bank will also introduce a savings insurance system to ensure Financial Sector stability; improve the convertibility of mortgaged property; create a legal environment to manage development and investment banking activities; and stimulate capital market development.
Payment cards with a unified network 
On October 18, the Golomt, Xac, Capitron and State Banks joined the Inter-bank Payment Card’s Unified Network.
As the ‘One Card-Unified Network’ service comes into effect, this is expected to: reduce cashrelated risks; make banking and financial services easier, faster and more confidential; increase the use of non-cash payments; and raise public confidence in banks. The Central Bank is giving attention to the reliable
and unremitting operations provide by the unified network and plans to issue national-brand payment cards.
source: 'mongol messenger'newspaper
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