The Bank of Mongolia announced that it has purchased 22 tons of gold in 2018. This is a 10 percent increase compared to 2017. Since gold tax was eased in 2014, the amount of gold deposited to the Bank of Mongolia continuously increased and 2017 was a record year with 20 tons. But now 2018 has exceeded the previous record by 10 percent. Due to the lack of attendance in parliament, the law draft to extend 2.5 percent royalties for 5 more years hasn’t been approved yet. Thus royalties could reach 7 to 9 percent according to the BoM. The BoM calculated that gold purchases could increase foreign exchange reserves by USD 750 million. In October 2018, foreign exchange reserves reached a 6-year high of USD 3.4 billion. In the national monetary policy main directives, the foreign exchange reserves are targeted to reach USD 6.5 billion in the midterm. Thus the BoM intends to follow policies to increase gold purchases in the near future.

The International Monetary Fund and other international organizations have noted that Mongolia’s foreign exchange reserves are still vulnerable in their Sixth Review of Mongolia’s Extended Fund Facility. The BoM is purchasing gold from individuals and institutions based on international prices on London Metal Exchange. Gold spot price is fluctuating around USD 1,282 a 6-month high.

Source: BloombergTv.mn