Mongolia Increases Interest Rate to 15% to Protect Currency

 The central bank of Mongolia raised its key interest rate to 15 percent to protect the currency, reversing a cut in borrowing costs to 10.5 percent in May.

The Mongolian tugrik initially rose after the announcement. By 4:26 p.m. in Ulaanbaatar it was falling again, and traded at 2,268 per dollar. 

The currency is headed for its 24th straight daily decline.

The increase follows the new government’s decision earlier Thursday to freeze some spending as part of an austerity plan to stave off an economic crisis. 

The decision was taken to improve yields on tugrik-denominated assets in order to protect the currency and ensure mid-term stability, the bank said in a statement on its website. 

Source: Bloomberg