Exchange rate fluctuation on rise [Archives:2003/641/Local News]

June 12 2003

Mohammed bin Sallam
SANA'A_ A financial report issued Monday by the Yemen Strategic Studies Center called for following an efficient currency policy to stop local currency exchange rate fluctuations.
The report issued by the center said the Yemen market undergoes exchange rate fluctuations following a relative calm the currency has seen in the past period.
The report has attributed the reasons behind the exchange rate fluctuations to the current development changes such as, terror acts and US-UK invasion to Iraq.
The report said killing the former YSP Assistant Secretary General and three American doctors in Jibla at the end of the last year has also played a negative role in exchange rate fluctuations.
The report also stated that the local and regional current incidents particularly American military massing up in the Gulf urged many people to keep big quantities of dollars to encounter any possible commitments.
Since October, 2001, exchange fluctuations have taken speedy rates as one dollar jumped to 170 rials then to 178 rials, but at the beginning of this year it recorded a price of 183 rials.
The report also pointed to the decrease in tourism revenues that hit more than 80% than it had been planned for following the 11 September 2001 events. Those events are considered one of the temporary factors affected the exchange rate.The report noted that the national Yemeni capitals used for investment abroad is another reason behind the exchange rate fluctuations.
During the last two years, Yemen has been overburdened with loans which have been estimated at YR. 12 billion .Added to that the drop in the purchasing power of the rial due to market fluctuations that caused imbalance to the state budget. The rise in the exchange rate also negatively affect Yemen's capability of attracting foreign investment, as it is natural for investments to go to countries enjoying more financial and monetary stability. According to report, halting exchange rate fluctuation in Yemen requires and increase in foreign currency supply in addition to raising the legal reserves of deposits.