With the conflict between the Yemeni government and the Southern Transitional Council (STC) affecting Yemen’s economy, currency exchange shops either closed their doors or abstained from selling hard currencies.
The Yemeni rial has lost more of its value against foreign currencies as a result of that conflict.
Bankers in the interim capital, Aden, confirmed that the exchange rate of the rial has dropped to 800 against the dollar. This makes up the most significant depreciation in the local currency since the nationwide coup in 2014.
A new crisis had erupted after the STC seized cash containers belonging to the Central Bank of Yemen (CBY), leaving public servants concerned for their monthly salaries and worsening the already deteriorating living conditions in Yemen.
STC armed men had taken over seven cash containers, hauling around 80 billion rials from Aden seaports to CBY headquarters in Aden.
With the drop in the currency exchange rate, the CBY issued a circular advising money exchangers across Yemen not to allow for agent accounts to exceed insurance ceilings.
CBY also warned against dealing with unlicensed money exchangers and called for maintaining fair competition among them.
While the bank threatened to take legal measures against violators, observers fear that the continued decline of the currency will lead to a sharp rise in the prices of necessary commodities and a decrease in the purchasing power of the population.
This comes especially in light of the parallel intransigence by the Iran-backed Houthi militias that have prevented the circulation of the new edition of banknotes in areas under their control.
The legitimate Yemeni government, in a statement, blasted the STC over the seizure of the money convoy, denouncing the move as barbaric.
It also accused the STC of continuing to refuse to implement the Riyadh Agreement, deliberately obstructing it.
Last November, Riyadh sponsored an agreement between the government and STC following an armed conflict in southern Yemen.
According to the deal, a new Aden-based government would be formed, all military units would be tied to the defense and interior ministries and the two parties would exchange prisoners.
Another agreement was signed in April between the government and STC to implement the Riyadh Agreement.
Yemen's southern provinces have witnessed repeated clashes between government forces and STC fighters since the latter declared self-rule in Aden in late April.
