Local currency dealers shy away from dealing with Yemeni riyal

The deteriorating situation in Yemen with regard to the lack of political and economic stability have driven downward the value of the Yemeni riyal against the dollar and other key currencies.

This is set to negatively reflect upon the already weak economy in Yemen despite the recent assurances of the Central Bank of Yemen that currency exchange rates have actually remained relatively stable. Nonetheless, global reports confirm the political upheaval in the country may inflict great harm on the Yemeni economy.

The exchange rate of the Yemeni riyal has declined against the US dollar to 215 riyals, and against the Saudi riyal to 57 Yemeni riyals.

Ahmad Ali, member of the International Federation of Technical Analysts (IFTA) said that the Yemeni riyal has been dropping for some time, adding that it may reach 250 against the dollar. “This is a very strong and serious drop for the Yemeni riyal, which will negatively affect the country's economy,” he confirmed.

He dismissed the notion that the dropping value of the Yemeni currency will negatively affect the value of the Saudi riyal, mainly due to the weak mutual trade between the two countries which is mostly concentrated in agro-products.

The trade balance of the Yemeni economy saw a surplus of $811 million at the end of 2012, yet the political disturbance that hit the country and cast its shadow over the national economy prompted Yemen to record the biggest deficit in its trade balance in nine years, in 2013. Ali described the steps made by Yemenis to transfer their money into other currencies as a good decision. “Most probably, the Yemeni workforce will transfer their money either into the Saudi riyal or dollar,” he said.

Salim Al-Amoudi, a currency dealer in Makkah, said that exchange shops in the city have largely opted to reduce their dealings in the Yemeni currency because of its declining exchange rate and the decreasing number of Umrah pilgrims coming from Yemen. He said that the currencies being exchanged most frequently in Makkah and Jeddah are the dollar, euro and English pound, followed by the UAE dirham and the Moroccan dirham.

“Recently the demand on the Indonesian rupiah has increased, where one million rupees now amounts to SR295, while the price of one Jordanian dinar amounts to SR5.25. There is also demand on the Egyptian pound, the Tunisian dinar and the Indian rupee,” he said. Another currency exchange dealer in Makkah, Ahmad Bamaoudah, also confirmed that demand on the Yemeni currency has declined. He added that the gains and profits of currency exchange shops have been concentrated on the dollar and euro, for which demand continues all year long.