Saudi Arabia gives $200m more to boost Yemeni riyal

UAE minister praises Saudi move to deposit $200m in Yemen’s central bank

Saudi Arabia said yesterday it will deposit $200 million (Dh734.5 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 Bin Abdul Aziz had “approved a request” from Yemeni President Abd Rabbo Mansour Hadi to provide the funds, the official Saudi Press Agency reported.

The riyal rose on news of the latest Saudi deposit, trading at just under 700 to the dollar yesterday against 820 the previous day.

The kingdom, which leads a coalition supporting Hadi’s government in its fight against the Iran-backed Al Houthi militia, 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 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 per cent after the riyal slid more than 36 per cent since January.

Saudi Arabia has given a $200 million (Dh734.5 million) cash infusion to Yemen’s central bank to shore up its reserves after the wartorn country’s currency went into freefall over the past few weeks.

UAE Minister of State for Foreign Affairs Dr Anwar Gargash voiced support for the Saudi move, tweeting: “The collapse of the Yemeni riyal is a fundamental challenge for citizens, and is more critical than the availability of food. Saudi Arabia’s initiative to support the riyal during these testing circumstances is important. It is vital the international community pressures Al Houthis to hand over part of the $5-$6 billion they have looted from the state income [as this will help] to support the rial.”

The Yemeni riyal has lost nearly half of its value this year and traded 800 riyals to the dollar on Monday, sending food and fuel prices soaring. The state-run Saudi Press Agency says the “donation” will help “achieve stability of the Yemeni economy and boost the local currency.”

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

A Saudi-led coalition backing Yemen’s internationally recognised government has been at war with the country’s Al Houthi militia, since 2015. The government controls the south, where its central bank is located. Many exchange offices shut down in Sana’a and the southern port city of Aden.

Unrest

Protesters have taken to the streets over the past days in the south, blocking roads and burning tyres, demanding President Abd Rabbo Mansour Hadi sack his government over its failure to improve the economy.

Because of the war, Yemen has largely lost its main source of foreign currency from oil and gas exports, which amounted to nearly 70 of the country’s revenue.