In Mongolia, where no coins are used, the country’s national currency, the tugrik (or tögrög), has slowly been making a comeback due to massive deflation and significant revaluation against the U.S. dollar.
As such, the humble 1 tugrik banknote – the smallest currency denomination in Mongolia, worth roughly US$0.0007 – has re-entered the daily lives of Mongolia’s citizens after being virtually unusable in recent years.
In addition, an end to the impasse between the Mongolian government and the worlds mining corporations looms on the horizon, which would likely ensure that the country comes out of the recession in better shape than it went in.
Mining is crucial to the success of an economy that depends largely on livestock and cashmere wool. Yet the exploitation of international mining companies, coupled with the naivety of Mongolia’s previous government, has led to a ban on mining in Mongolia.
To shed some light on the story, Mongolia’s government had previously allowed foreign mining companies a five-year grace period to set up operations, in an effort to minimize start up costs in their country.
At the end of five years, however, Mongolia found its valuable deposits significantly depleted and some nearly bare. The result being no tax revenues for the Mongolians and free minerals for the world’s mining corporations.
After instilling a long term ban on mining, the situation between the Mongolians and the miners has recently been renegotiated.
Miners, when they do return, are at least likely to find a reasonable economy where a bottle of beer costs the equivalent of 50 cents, and a cashmere lined leather coat is as little as US$250.
How long the 1 tugrik note will stick around as the Mongolian economy expands will be interesting to witness.