Yemen | A “currency war” makes life difficult for the population, which has already been hit hard

(Dubai) The government of Yemen and the Houthi rebels are now in a “currency war” which is making the existence of an already bloodless population who has been facing the world’s worst humanitarian crisis in years, according to the UN, even more difficult.

Posted on Aug 22, 2021 at 12:38 pm

Carolyn LAMBOLEY Agence France-Presse

In a country that had been in conflict for seven long years, rival parties still used the same currency until late 2019. At that time, however, the riyal was overtaken by the Yemeni divisions: the rebels then banned new banknotes that were printed in Aden (south), the seat of the government in exile.

As a result, these banknotes have accumulated in the areas under loyalist control, causing unprecedented devaluation of the riyal and runaway inflation.

In recent weeks, the “national” currency in government areas has hit an all-time low – over 1,000 riyals per dollar – while the exchange rate has remained stable in areas under the control of the Houthi – around 600 riyals per dollar.

“We are now seeing two rates for the same currency […]. From an economic point of view, it’s a deviation, ”comments Amal Nasser, economist at the Sana’a Center for Strategic Studies.

According to several reports, this difference also means that Yemenis pay a heavy price for any transfer between the two zones with high commissions.

And the roughly 30 million Yemenis didn’t need that.

“Inflation”

This country, divided between the Houthi territories in the north – including the capital Sanaa – and the south in the hands of the government, has in fact been the scene of the world’s worst humanitarian crisis for several years, according to the UN.

While Yemen was already considered the poorest country on the Arabian Peninsula before the war, schools, factories, hospitals and shops have since been destroyed or closed.

A quarter of the labor force is unemployed and cannot meet basic needs.

On the currency front, the government transferred the central bank to Aden after the Houthis captured Sana’a in 2014. But it wasn’t until years later that unity broke up there too.

In view of the collapse in the exchange rate in the government areas at the beginning of August, the central bank announced that it would gradually withdraw the new banknotes – those banned by the Houthis.

At the same time, it announced that it would bring old denominations into the market.

“Of course it is [nouvelle] Currency injection will have a negative impact [l’économie]”Already reduced in sorrow” by an increase in inflation, which will affect the purchasing power of the citizen, denounces Alaa al-Haj, a resident of Aden.

“Forgeries”

Analyst and former advisor to the central bank, Wahid al-Fawdai, said these “old” notes were drawn from his own reserves. But experts doubt it.

The rebels blew up “forgeries” and asked the people of the north not to use these “forgeries” either.

They backed up their statements by accusing a Russian company, Goznak, of having “printed a large amount of counterfeit money, in particular 1,000 riyal notes, in June 2021 in consultation with the Central Bank of Aden.”

When asked by AFP, Goznak and the Yemeni central bank did not comment.

Experts are now lost in suspicions, but assure with one voice that it will be difficult in the long run to differentiate between all these “categories” of tickets.

To add to the confusion, some small speculators are trying to tarnish the root cause of the cuts in order to gain margins on the exchange rates.

In short, the Yemeni population – more than two thirds of them are dependent on international aid – no longer know which banknotes to turn to.

Safaa Maati, a resident of Aden, seems upset about this money battlefield.

“They printed new banknotes, they didn’t print them, they brought back old money, they brought back new money: the situation is getting worse in spite of everything …” she says.

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