China’s
decision to allow the renminbi to appreciate against the dollar, even if
gradually, is a major
development in the world financial markets. Stock markets in Japan, South
Korea, Australia, Shanghai and Singapore have risen and investors believe that
the Beijing decision will not only affect the greenback, but also other
currencies such as the euro and Japanese yen to be stronger.

How
will the Chinese decision affect Mongolia? Chinese currency is believed to be
around 25 percent of our foreign currency reserves, which will now become less
in terms of the US dollar. Prices are also likely to rise as Chinese exports
will be more expensive and Mongolia will have to pay more for all products that
come from China.

The
announcement was made on Saturday evening when one yuan cost MNT 202.50. This
rose to MNT 203.20 on Monday.

Mongolbank
experts have chosen to watch the situation for some time.