- The Washington Times - Saturday, January 18, 2003

SANAA, Yemen, Jan. 18 (UPI) — Yemen's Prime Minister Abdul Qader Bajmal chaired an extraordinary meeting of the Higher Economic, Investment and Petroleum Council Saturday to discuss confronting the continued devaluation of the Yemeni currency, the riyal.

The meeting came after the riyal's value dropped about 7 percent since the beginning of the year, significantly raising the price of most of the basic food commodities in the country.

The council called on Yemen's Central Bank to use its foreign currency reserves to stop the deterioration of the riyal.

A statement issued by the council called on the Central Bank to "find available treatment for the stability of the Yemeni riyal."

It added that the bank "has the ability to cover the needs with hard currency, as its foreign currency reserves stand at $4.2 billion, enough to guarantee a balance to the financial situation."

Financier and money exchanger Mohammad Khalil told United Press International in the capital, Sanaa, that the fast devaluation of the riyal has prompted Yemenis to rush into exchanging their national currency into U.S. dollars in anticipation of a further devaluation in the event of an American war on Iraq.

The economic council's statement said the meeting agreed to "adopt wise, and more dynamic, financial and banking policies, including activating control methods, and dealing with the market … within a free economy."

Economists said the price increase in foreign currency could be intentional and a possible form of competition to benefit from the political and security situation in the region, particularly that the Central Bank's foreign currency reserves was enough to import goods for the next 16 months.

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