Macroeconomic Forecast Mongolia

We have revised down our long-term forecasts for the tugrug to take into account the worsening global investment outlook and the concomitant declining potential for Mongolia to attract portfolio investment capital beyond the mining sector. The currency is now expected to appreciate only marginally to MNT1130.00/US$ by end-2010. We maintain though, that the trend for the currency will remain positive, mainly due to the effects of the rapid acceleration in foreign direct investment expected once a key mining agreement with foreign investors over the Oyu Tolgoi copper deposit is signed. This will not only rapidly increase FDI inflows in the short term, but also export values over the long run.

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