Yemen's official foreign currency reserves have declined to $2.1 billion at the end of 2015, covering only two months of imports. Without sufficient foreign currency reserves, the Central Bank of Yemen is quickly running out of options, and Yemen is quickly sliding into a foreign exchange crisis, which could be the precursor of a long-feared dramatic collapse of Yemen's economy.
In its latest publication, DeepRoot Consulting provides an overview of the current state of the economy in Yemen, and argues that aggressive monetary policy interventions are needed to stabilize the currency. The paper provides a summary of intervention by the Central Bank of Yemen since the current war started, and explores the Japanese experience in foreign exchange control after the second world war.
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