Despite an ailing economy and a bloody coup, Yemen’s national currency saw a shimmer of hope for recovery with exchange rates registering their best improvement yet this month trading at YER590 per US dollar.
But hopes were soon battered by doubts that better rates are a mere consequence of Houthi currency manipulators.
The dollar exchange rate maintained a YER590-600 range, depending on region and whether they were run by Houthi militants or by legitimate government forces, currency exchangers in Aden told Asharq Al-Awsat.
The Iran-backed Houthis are known for driving down national currency rates by operating a robust black market. Currency analysts believe the militias are hoarding hard currency for later arms purchases.
Yemeni economist Mustafa Nasser said Houthi behavior threatens to deter all efforts invested in the national currency’s recovery. In a Facebook post, Nasser urged the government and Central Bank to take all measures needed to protect the best interests of Yemeni citizens.
This significant improvement, following a painful crash that saw the rial trading at YER800 to the dollar, was prompted by a series of economic commitments by the government and ongoing Saudi support, insider sources at currency exchange shops in both coup-run Sanaa and government-controlled Aden told Asharq Al-Awsat.
Saudi Arabia is among the most generous donors to Yemen’s humanitarian relief effort.
Last spring, alongside the UAE, it pledged $1 billion in aid to Yemen. In January, it deposited $2 billion in its Central Bank to prop up the rial.
Apart from committing to a $60 million monthly oil derivatives grant, the Kingdom also provided a $200 million cash infusion to the Central Bank to shore up its reserves after the war-torn country's currency went into freefall in September.
In contrast, locals said that progress registered in currency markets did not trickle down to commodity prices.
“Commodity prices cannot be lowered overnight,”Mohammed H., an Aden-based retail trader, told Asharq Al-Awsat, while explaining that they depend on break-even figures decided by purchase rates of deals struck by traders.
“I have a stock bought at a high price I need to sell before buying at lower prices,” he complained.
