A representative from the UN Special Envoy’s office for Yemen said discussions are ongoing with Yemen’s central banks in Sanaa and Aden to find sustainable solutions to prevent further economic collapse.
Talks include setting an optimal currency supply and unifying exchange rates across the country.
In a statement to Asharq Al-Awsat, the official said recent talks in Sanaa highlighted that a unified currency and banking system could boost financial stability and economic growth.
These comments come as Yemen’s internationally recognized government battles to halt the steep decline of its currency amid worsening economic and living conditions, nearly a decade after Houthi forces seized the capital, Sanaa.
Yemen’s currency hit a new low Thursday in government-held areas, trading at 2,026 rials per US dollar and 532 rials per Saudi riyal.
Yemeni economic experts told Asharq Al-Awsat that the government needs urgent action to regain trust from citizens, the coalition, and international partners, suggesting it should bring in experienced economic leaders to handle the crisis.
The office of UN envoy Hans Grundberg reported that over 70% of Yemenis live in poverty, with women suffering the most.
In response to Asharq Al-Awsat, Grundberg’s team emphasized that unifying Yemen’s currency and banking sector is essential to pay public sector salaries, which are crucial for millions.
Since April, the envoy’s office has worked with Yemen’s central banks in Sanaa and Aden to find sustainable solutions to stabilize the economy, including maintaining exchange rates, ensuring a balanced currency supply, and supporting government spending.
Recent discussions in Sanaa reaffirmed that a unified currency and banking system can strengthen Yemen’s economy and increase purchasing power. The UN office urged that these issues remain free from political interference.
As Yemen’s currency continues to fall, temporary solutions have shown little effect.
Prime Minister Ahmed Awad bin Mubarak described the currency drop as a battle equal to the military fight to reclaim the state. He pointed out that the sharp decline is “unreasonable” and likely part of a planned scheme, calling for collective action to counter it.
Since returning to Aden on Oct. 15, Presidential Leadership Council (PLC) Chairman Dr. Rashad Al-Alimi has faced major economic challenges, including a sharp currency decline.
He has since held urgent meetings with central bank officials and the crisis management committee.
On May 30, 2024, Yemen’s central bank in Aden suspended dealings with six major banks in Houthi-controlled areas.
The PLC and government later reversed the decision, citing the need to prioritize Yemeni citizens’ welfare amid the country’s severe hardships.
Dr. Mohammed Banajah, Deputy Governor of the Central Bank of Yemen, recently stated that the bank has fully adhered to all agreements with the UN envoy, including the cancellation of plans to withdraw the SWIFT system from banks that have not moved their operations to interim capital, Aden.
He pointed out that the opposing party has not made any concrete moves or issued a goodwill statement.
Regarding the sharp fluctuations in exchange rates, Banajah attributed these changes to Yemen’s worsening economic situation, which directly affects the banking and financial sectors.
He confirmed that the central bank is working hard to address these challenges using available monetary policy tools.
Yemeni economist Rashid Al-Ansi argues that the government must take immediate steps to regain the trust of citizens, the coalition, and the international community.
Speaking to Asharq Al-Awsat, Al-Ansi stressed that this requires bringing in experienced economic professionals and implementing a comprehensive reform program with clear timelines to improve public finances, cut spending, boost non-oil revenues, and push for the resumption of oil exports.
