Saudis in bid to up Yemen riyal

RIYADH, Oct 2, (Agencies): Saudi Arabia said Tuesday it will deposit $200 million in Yemen’s central bank to help stem a slide in the riyal that has sent food prices soaring in the famine-threatened country.

The emergency aid injection was aimed at “stabilising the economy and increasing the value” of the Yemeni currency, the Saudi information ministry said in a statement.

King Salman of Saudi Arabia had “approved a request” from Yemeni President Abed Rabbo Mansour Hadi to provide the funds, the official Saudi Press

Agency reported. The oil-rich kingdom, which leads a coalition supporting Hadi’s beleaguered government in its fight against Shiite Houthi rebels, already deposited $2 billion in the central bank in January to support the currency, which has lost more than two thirds of its value since the coalition intervened in March 2015.

The new deposit comes less than two weeks after the central bank in the government’s de facto capital of Aden raised interest rates on deposits to an all-time high of 27 percent after the riyal slid more than 36 percent since January.

The slide has seen a sharp rise in food and fuel prices that triggered protests across the government-held south in early September and prompted the government to raise public sector salaries by 30 percent.

The riyal rose on news of the latest Saudi deposit, trading at just under 700 to the dollar on Tuesday against 820 the previous day, according to moneychangers in the rebel-held capital Sanaa.

But protestors demonstrated against the high cost of living for the second day running in the southwestern city of Taez, where shops were shuttered and tyres set alight, AFP correspondents reported.

In a statement carried by the government news agency Saba, central bank governor Mohammed Zamam accused commercial banks and money-changers of speculating on the riyal, causing its downfall.

He threatened to impose sanctions on such banks and to seek legal action against speculators for economic crimes. The UN’s humanitarian coordination office warned last month that the currency depreciation was likely to make another 3.5 million Yemenis food insecure, in addition to 8.4 million people who already need emergency food assistance.

The charity Save the Children has warned that more than five million children in Yemen are at risk of famine.

The conflict has killed nearly 10,000 people since the Saudi-led intervention in 2015, most of them civilians, and triggered what the United Nations has described as the world’s worst humanitarian crisis.

With 8.4 million not knowing where their next meal is coming from, the UN Office for the Coordination of Humanitarian Affairs warned last month that a further slide by the rial could make an additional 3.5 million Yemenis insecure about food, and that over 2 million are “likely to be at a heightened risk of famine.”

Even in cities and town where food can be found in marketplaces, many do not have the cash to pay for it.

In the Yemeni capital, Sanaa, grocery stores and supermarkets were closed on Tuesday morning and long lines of cars were seen outside gas stations. Many exchange offices shut down.

As the dollar value varied from one place to another, Yemenis took to social media to post rates from their locations and decry the government’s lack of action. Protesters have also taken to the streets over the past days in the south, blocking roads and burning tires, demanding President Hadi sack his government over its failure to improve the economy.

After the war broke out and the Saudi-led coalition imposed a sea, air, and land embargo, Yemen’s oil and gas production and exports – which amounted to nearly 70 percent of the country’s revenue – were basically obliterated. The embargo also contributed to increasing prices of imports. Ninety percent of Yemen’s food and fuel are imported.

In 2016, Hadi’s government moved the Central Bank from the Houthi-controlled Sanaa to Aden after accusing the rebels of using the bank’s funds to finance the war and buy weapons.

The move backfired as it split the only functioning institution in Yemen and dealt a blow to bank operations. More than one million state employees were left without a steady income.