Government raises interest rates to tackle currency freefall

folarin okunola

August 18, 2016 9:04 PM

Mongolia's tugrik has been the world's poorest performing currency in August, dropping 8 percent against the dollar since the beginning of the month and 12.9 percent this year.

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Mongolia has raised its benchmark interest rates by 4.5 percentage points to 15 percent on Thursday, the central bank said, as it struggles to deal with its free-falling currency.

"Financial measures for the medium term have been taken to increase the rate of return for local-currency assets and provide more stability for the tugrik," the central bank said in a statement.

Last week, the finance minister warned that the cash-strapped government would struggle to pay out wages and meet other costs, prompting a slump in sovereign dollar bonds.

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