• Yemeni government in Aden has set up a committee to address the riyal’s recent decline
• Currency speculation by black-market money merchants blamed for the currency’s fast depreciation

Saeed Al-Batati

AL-MUKALLA: The Yemeni riyal on Tuesday broke a record of 1,630 per dollar, moving closer to its all-time low of 1,700 in government-controlled areas.

Local money dealers said the Yemeni riyal was exchanged at 1,632 against the dollar in Aden, Yemen’s interim capital, and other government-controlled areas, up from 1,500 riyals a few months earlier.

The Yemeni riyal fell to a historic low of 1,540 against the dollar in government-controlled territory in November, after hovering around 1,200 against the dollar since the creation of the internationally recognized Presidential Leadership Council in April 2022.

It fell to an all-time low of 1,700 per dollar in December 2021, compared to 250 in early 2015.

This week, the Yemeni government in Aden set up a committee to address the riyal’s recent decline.

During previous rounds of currency depreciation, Yemen’s Aden-based central bank closed unlicensed exchange firms, held public auctions to sell hard currency to local traders, replaced the unofficial remittance system between exchange companies, and requested that authorized exchange firms and banks send their financial statements to the bank.

All steps have failed to stop the decline of the Yemeni riyal. 

Only billions of dollars from Saudi Arabia and the UAE in financial packages and deposits into Aden’s central bank have enabled the Yemeni riyal to rebound briefly before continuing its downward trend.

Yemen’s government has long blamed currency speculation by black-market money merchants for the currency’s fast depreciation. It has also cited a full stop in oil exports, the country’s primary source of wealth, following Houthi attacks on oil facilities in October last year as another cause for depreciation.

The decline of the riyal has raised the cost of necessities like rice, wheat, petrol, and transportation, as well as sparked violent demonstrations in Aden, Al-Mukalla, and other Yemeni cities controlled by the government.

Yemeni experts believe the recent fast depreciation of the currency is unsurprising given the central bank’s depletion of hard currency reserves and the Yemeni government’s failure to regulate the black market.

The director of the Studies and Economic Media Center, Mustafa Nasr, told Arab News on Tuesday that the Yemeni riyal would continue to fall in the upcoming months if the current circumstances persisted, including the sharp decline in the government’s earnings from oil exports, tax and customs collections, as well as its inability to control the black market.

Nasr added that if the central bank had kept printing new notes, the riyal would have reached its all-time low of 1,700 earlier.

“Given these difficulties, which align with a condition of speculation by powerful and wealthy money changers, it is not shocking that the value of the riyal declined to more than 1,600 riyals per dollar,” Nasr said.