Yemen currency plunges, two committees formed to prevent further decline
The Yemeni riyal on Wednesday reached record lows, trading 1,003 to the dollar in the black market despite fresh economic measures by the government, currency traders told Arab News.
Chaired by Prime Minister Maeen Abdul Malik Saeed, the government’s Supreme Economic Council (SEC) on Tuesday approved a number of measures to curb the currency’s fall, accusing local exchange firms of manipulating its value for profit.
The council ordered the Adenbased Central Bank of Yemen to monitor local exchange firms by adopting punitive measures against money traders who violate the country’s financial law.
The bank was tasked to form two committees: One would review revenue collection, ensuring they are deposited to central bank branches across the liberated provinces; the other would work on boosting oil exports.
The government accused local currency dealers of engaging in speculative activities on hard currencies that contributed to the sudden rapid fall of the riyal.
“The SEC confirms that recent currency depreciation is not based on objective reasons but speculative considerations and misinformation,” the council said in a statement.
Meanwhile, the central bank’s inspectors, escorted by armed soldiers, were seen roaming around the city of Aden, closing firms that did not comply with the country’s monetary rules.
The market did not positively react to the government’s measures and threats. The riyal hit 1,003 to the dollar on Wednesday afternoon in the southern port
city of Al-Mukalla, after bouncing back to 985 on Monday. The riyal had reached a new record low on Sunday night, hitting 1,000 riyals to the dollar. It was trading at 215 to the dollar in early 2015.
The riyal briefly recovered in January after a new government — formed under the Riyadh Agreement — returned to Aden as hostilities between the internationally recognized government and the separatist Southern Transitional Council (STC) subsided.
Yemen’s Parliament Speaker Sultan Al-Barkani urged the prime minister to find urgent solutions to the devaluation of the riyal and to reform the country’s financial system, adding that parliament would stand by government’s measures to address corruption and collection of revenues.
“All necessary measures should be taken quickly to stop the deterioration (of the currency) and reach a real solution. And we hold you responsible if you fail as the situation cannot be delayed,” Al-Barkani said in a letter to the prime minister.
Yemen analysts have argued that neither the government nor the central bank can impose the latest measures in the liberated areas as the Yemeni government has been based outside the country since March.
Previous measures to address the depreciation of the riyal have all proved ineffective. Attempts included closing exchange firms, stopping the remittance system between local exchange firms known as Hawala — replacing it with a formal electronic network under the central bank’s supervision — and supplying local fuel and goods importers with dollars. None of these attempts succeeded.