Mr. A.Batsukh, Mongolbank Governor: It Is Clueless That Tugrug Rate Is to Fall Down

Apr 10 • Business, Economy, News • 17107 Views • No Comments on Mr. A.Batsukh, Mongolbank Governor: It Is Clueless That Tugrug Rate Is to Fall Down

1 Star2 Stars3 Stars4 Stars5 Stars (No Ratings Yet)
Loading...

image_gallery.jpgWith reference to increase in commodity goods price, rumors related to fall-down of tugrug rate in the market and commercial banks would have no reserves have spread. Thus we shared views with Mr. A.Batsukh, Governor of Mongolbank.

It is said Mongolbank sent notices to commercial banks to stop lending because tugrug rate would fall down in the near future. Is it true?

This is a groundless rumor that bigger banknotes are to be issued and tugrug rate is to fall down. Unfortunately such picturesque can be observed at the market. Last fall, there was a same rumor as well. Viewing it as a professional organization, it might be a business interest to get some profit for a short term. For instance, great amount of foreign currency have been stored, calculating wrong estimation and when flow of foreign currency increases tugrug capacity improves at the interbank market. USD, which was 1172, reached 1167 tugrug today. Maybe some people spread rumor in order not to be in charge of loss. Such business cannot be successful and is revealed soon.

In this case, what kind of measures are commercial banks take?

This is not a good way to sell products and goods expensively, trade foreign currencies at higher price and make wrong explanations and notes. Rumors about tugrug rate to fall are false ones. Also dignity of those spreading rumors like this at this very competitive economy would loose their fame. It is wrong to spread such rumors and the market won’t go far along with rumors.

Some people say that there is no other way for banks to make things expensive in order not to bear greater loss if currency rate increases. What kind of measures are to be taken?

Dollars should be sold at lower price in order not to affect inflation and loans should be provided at tugrugs, obtained from selling USD.

Is policy rate effective?

By increasing policy rate, surplus money in banks was withdrawn. In general, loans would be expensive. In other words, lending should be slowed down to a precise level. Annual lending growth is 60 percent. It is a high growth and should be decreased to 30-35 percent.

Inflation goes up but isn’t it detrimental to ordinary citizens?

Banks should provide loans, carefully selecting the projects. It means their requirements will be tight and require reasonable security.

Does it affect on loan interest rate?

There is no abrupt but gradual affect on interest rate. It means a standard of assessing the risk is being enhanced.

Salary of public servants is being increased and child money is going up a bit. Does it affect on inflation increase?

It is a factor that affect unfavorably the inflation. Salary of public servants was increased dramatically in a short period. Social welfare has been increased as well. These things affect the inflation whilst supply shows no increase. Budget expense should be proper in macro level but policy makers do not get it well. Salary increase should not exceed average productivity growth and salary and compensation should not be increased greatly. But these regulations are not adhered to well.

Didn’t slow down of bank lending through policy rate affect the rumor as well?

I don’t think so. It is because of narrow business mind.

Inflation rate has increased and USD rate fell down. What measures do Mongolbank undertake?

Inflation rate is high and as of last 12 months, it reached approx. 17 percent. Mongolbanks uses tools and measures that any banks use worldwide. It increases policy rate as well. Lately it increased policy rate by 1.35 percentage points to 9.75 percent. Simply it means that commercial banks get securities from Mongolbank at annual interest rate 9.75 percent and place it securely and therefore they’re not interested in lending cheap loans. It will maintain hypergrowth of lending, which burnt national economy, in a normal level. This is the way how central banks take measures. It would be of great contribution to us if budget expenditures are saved, ineffective investments are cut, too much social welfare is regulated and budget balance is beneficial.

Related Posts

Leave a Reply

Your email address will not be published. Required fields are marked *

« »