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Mongolia raises interest rate to 15% to fight currency slide

Mongolia hikes up interest rates to a record level of 15%.
Mongolia is defending its currency amid growing concerns over a possible default.

DALIAN, China -- Mongolia's central bank has lifted the country's key interest rate by 4.5 percentage points to 15% in a desperate move to halt the home currency's decline amid capital flight triggered by plunging resource prices.

Thursday's hike came just months after the Bank of Mongolia cut the rate to 10.5% in May. The central bank defended its drastic hike, citing the tugrik's 7.9% decline against the dollar since late July, saying it acted to "protect the currency and achieve stability in the medium term" and to increase yields on tugrik assets.

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