02099cas a2200277 a 4500 AALejournalIMF009204 230101c9999 xx r poo 0 0eng d 5.00 USD 9781451865691 1018-5941 BD-DhAAL BD-DhAAL Schneider, Todd. Yemen : Exchange Rate Policy in the Face of Dwindling Oil Exports / Todd Schneider, Nabil Ben Ltaifa, Faisal Ahmed, Saade Chami. Washington, D.C. : International Monetary Fund, 2007. 1 online resource (22 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students This paper investigates the likely implications of declining oil production on Yemen's equilibrium exchange rate, and discusses policy options to ensure a smooth transition to a nonoil economy. The empirical results suggest that, as oil production and foreign exchange earnings fall, the Yemeni rial will have to adjust downward in real effective terms to keep pace with the equilibrium exchange rate. In light of strong pass-through from exchange rate depreciation to domestic inflation, this could entail a substantial depreciation in nominal terms. Given the nature of the adjustment, a floating exchange rate regime appears to be the best option, if supported by appropriate macroeconomic policies. However, given public fixation on a exchange rate stability, a softly managed float would be a better option for Yemen whereby the central bank may have to lead the market toward the equilibrium exchange rate. Mode of access: Internet Ahmed, Faisal. Ben Ltaifa, Nabil. Chami, Saade. IMF Working Papers; Working Paper ; No. 2007/005 Full text available on IMF http://elibrary.imf.org/view/journals/001/2007/005/001.2007.issue-005-en.xml IMF e-Library