MNT - Mongolian Tugrik

History of the Mongolian Tugrik (MNT)

In 1925, the Mongolian Tugrik was first issued after the establishment of the Mongolian People's Republic. The MNT currency was introduced to replace the old monetary system under the influence of Russia and China.

The Mongolian Tugrik was issued according to the gold standard, equivalent to 18 grams of silver. In order to create stability and increase the value of the Tugrik in the Mongolian economy.

After its issuance, the Mongolian Tugrik became the official and sole currency of Mongolia. However, the country faced economic issues and inflation, causing the value of the MNT to decline.

In 1991, after the dissolution of the Soviet Union, Mongolia transitioned to a market economy, causing the Tugrik to continue to depreciate significantly due to the economy's severe fluctuations. In the context of Mongolia's economic reforms and facing major challenges such as inflation and high unemployment rates.

Currently, the Tugrik is the official currency of Mongolia, but the value of the Mongolian Tugrik is quite low compared to other currencies. The Mongolian government is making efforts to reform the economy and manage the currency to stabilize the exchange rate of the Mongolian Tugrik.

Mongolian Tugrik (MNT) Denominations

Currently, the Mongolian Tugrik is issued in various denominations, including coins and banknotes, to meet payment needs:

Mongolian Tugrik coins

Mongolian coins are now rarely used in everyday transactions. Including the following denominations: 20, 50, 100, 200, 500 tögrög.

Mongolian Tugrik banknotes

Mongolian Tugrik banknotes that are widely circulated include denominations of 1, 5, 10, 20, 50, 100, 500, 1000, 5000, 10000, and 20000 tögrög.

The 5,000, 10,000, and 20,000 Tugrik banknotes are frequently used in large transactions. Small denominations like 1 and 5 Tugrik are used in daily transactions because of their low value.

Each Tugrik banknote features important historical and cultural figures of Mongolia.

Mongolian Tugrik (MNT) exchange rate

The exchange rate of the Mongolian Tugrik (MNT) against some major foreign currencies is:

1 USD ≈ 3,450 - 3,500 MNT

1 EUR ≈ 3,650 - 3,750 MNT

The Mongolian Tugrik has a relatively low value compared to other strong currencies in the world. The main reason the MNT has a low value is that Mongolia is a developing economy, heavily dependent on the export of natural mineral resources.

Factors affecting the value of Mongolian Tugrik (MNT)

The value of the Mongolian Tugrik is influenced by various factors. Specifically as follows:

Dependence on mineral exports

Mongolia is a country whose economy mainly depends on mineral exports, especially coal and copper. Therefore, when the prices of these resources decrease in the market, Mongolia's export revenue also declines, leading to a decrease in the value of the Tugrik.

Public debt and international borrowing

Mongolia is a country with a large public debt to develop its economy and infrastructure. Therefore, repaying debts in foreign currency puts increased pressure on the local currency. This causes the domestic currency to depreciate compared to other strong foreign currencies.

Trade balance deficit

Mongolia often imports many consumer goods and raw materials from other countries. This creates a trade deficit, causing the country to spend more foreign currency than it earns from exports, putting pressure on the Tugrik.

The exchange rate fluctuates flexibly

The Central Bank of Mongolia applies a floating exchange rate, which makes the Tugrik susceptible to fluctuations in supply and demand on the international money market. 

Political factors

China and Russia are two countries that have a significant influence on Mongolia. Especially in the fields of economics and politics. Therefore, any fluctuations from China or Russia will affect the value of the Mongolian Tugrik.

Foreign investment flow

Foreign investors have lost confidence due to the political instability and unclear legal policies in Mongolia. When investors reduce their demand for the Tugrik, it leads to a significant depreciation of the currency.

The future of the Mongolian Tugrik (MNT) is influenced by several economic, political, and social factors. As of October 2023, the Tugrik has faced significant volatility, primarily due to Mongolia's reliance on mining exports, particularly copper and coal, which are subject to global commodity price fluctuations. The International Monetary Fund (IMF) has engaged with Mongolia to address fiscal challenges and promote economic stability, which may bolster confidence in the Tugrik.

The ongoing geopolitical dynamics in the region, especially concerning China, which is Mongolia's largest trading partner, will play a crucial role in the Tugrik's future. The potential for diversification of the economy and investments in sectors beyond mining could enhance the Tugrik's stability.

Inflationary pressures and monetary policy responses by the Bank of Mongolia will be critical in shaping the Tugrik's value. Overall, while there are challenges ahead, strategic economic reforms and international partnerships may provide pathways for a more stable future for the MNT.

Thus, the Mongolian Tugrik is under depreciation pressure due to its heavy reliance on mineral exports, public debt, high inflation, and geopolitical and investment issues.