The Central Bank of Mongolia (Mongolbank) cut its policy rate by 100 basis points to 9.0 percent at an unscheduled meeting of its monetary policy committee and has now cut it up 200 points this year following a similar cut on March 11.
The bank's policy committee had been scheduled to meet on June 19.
"The continued spread of COVID-19 has changed the external and domestic economic conditions in a short span of time, aggravating uncertainties, contracting business activities in the economy, weakening domestic demand, and resulting in difficulties in loan repayment," Mongolbank said.
Mongolia's inflation rate rose to 6.4 percent in February from 5.6 percent in January but the central bank said demand-induced inflation is expected to be subdued on economic slack this year while lower oil prices is expected to affect supply-driven inflation.Mongolia's tughrik has been depreciating steadily since 2011 with the rate of its decline steady since October last year.
In response to the rate cut, the tughrik firmed to trade around 2,783 to the U.S. dollar, but still down 1.6 percent since the start of this year.
