Two new currencies menace Yemen’s economy

Two new currencies menace Yemen’s economy

Yemen's warring sides opened a new front in their five-yearconflict on Saturday, a battle over old and new banknotes that threaten tocreate two economies in the same country.

As of midnight, the Houthi militia which controls thecapital Sanaa outlawed the use and possession of crisp new Yemeniriyal bills issued by its rivals in the internationally -recognizedgovernment based in the southern port town of Aden.

The Iran-allied Houthis, who say people should only use the oldbills, have defended the ban as a move against inflation and what they callrampant money-printing by the government.

The government has branded the ban an act of economic vandalism.And the population, as ever, have been left stuck in the crossfire.

Yemenis from both sides told Reuters the ban had effectivelycreated two currencies with diverging values, adding to the turmoil in a statealready governed by two powers and brought to its knees by the war.

In the one-month build up to the ban, people inHouthi-controlled areas have been queuing to try to exchange their new riyalnotes for old, turning the grubby and torn bills into a prized and relativelyscarce commodity.

The riyal stood at about 560 to the dollar across Yemen beforethe ban was announced in mid-December. The rate has since slipped a little inHouthi-controlled areas to around 582, but slumped much further to 642 in thesouth, an area now awash with new bills.

That relative strength might look like a boon for northerners,if only they could get hold of enough of the old notes in time to keep afloatin the largely cash-based economy.

Related Stories

No stories found.
logo
Ajel
english.ajel.sa