Exchange Rate Above 2050 Riyals Per Dollar | Living Crisis and Calls to Unify Yemen’s Central Bank

NYN | Reports and analyses

Yemen faces a severe economic crisis, leading to a major devaluation of the local currency. The dollar exchange rate has surpassed 2050 riyals for the first time in history, with fears it may reach 2100 riyals soon. This situation has also led to an unprecedented alignment between the Saudi riyal exchange rate in Aden and the dollar rate in Sana’a, both standing at approximately 534 riyals, highlighting sharp economic disparities between government-controlled areas and those under Houthi control.

This economic downturn is worsening the already dire situation for citizens in Aden and nearby regions, where prices for food and basic commodities have surged, leaving people struggling with low purchasing power. Despite promises from the internationally recognized government of Yemen to implement economic rescue plans, the currency remains unstable, failing to return to below the 2000 riyals per dollar threshold.

In the face of these challenges, widespread protests are demanding price cuts and salary increases, as employees are struggling with low and irregular pay, complicating their living conditions. In a statement issued by the Teachers’ Union in Taiz, the union called for a salary increase of 30,000 riyals for every teacher in the province, following similar pay raises in other governorates, including Aden, Hadramout, and Marib, to help cope with the escalating cost of living.

A Potential Solution: Unifying the Central Bank

The office of the UN Special Envoy for Yemen, Hans Grundberg, views economic reform as the key to achieving a political solution, emphasizing the need to unify Yemen’s currency, central bank, and monetary policy. Grundberg has reportedly discussed this issue with relevant parties, stressing the importance of resuming oil and gas exports and paying public sector salaries that have been cut off since September 2016.

Political figures from various Yemeni parties support the idea of unifying the central bank as a first step toward economic stabilization. Leaders from the General People’s Congress, as reported, believe that unifying the central bank could help ease tensions, ensure transparent financial practices, and secure strong international guarantees to advance Yemen’s peace process.

Reuters reported that the Aden-based government faces an unprecedented financial crisis, delaying public employee salaries for months and struggling to provide fuel for power plants, affecting basic services. Government revenues have sharply declined, reaching record lows, while the central bank in Aden has been unable to assert its control over all areas under the legitimate government’s control.

Reports indicate a significant balance of payments deficit due to dwindling government resources and increased demand for foreign currency to cover import costs. The government is actively seeking financial aid from Saudi Arabia, the UAE, and international donors to meet its financial obligations and bridge the budget deficit.

Financial Crisis and Expatriate Officials’ Salaries

This severe financial crisis coincides with a large number of Aden-based government officials residing abroad, who continue to receive their salaries in U.S. dollars along with regular monthly incentives, despite previous instructions from Aden’s Presidential Council Head, Rashad al-Alimi, for their return. Local sources reported that the Transitional Council’s forces in Aden recently detained three government officials — Ali Al-Naimi, Assistant Director of the Prime Minister’s Office; Moussa Al-Serayb, Chief Secretary in the Cabinet’s Secretariat; and Ali Al-Qahawi, General Director of Resources — for proposing a reduction in salaries paid in hard currency to officials stationed abroad.

In a related context, Mohammad Hussein Halboob, Chairman of the Yemeni National Bank in Aden, stated that around 2,000 government officials living outside the country are provided with monthly allowances totaling approximately 815 billion Yemeni riyals (over $43 million), along with monthly salaries amounting to $12 million. Halboob noted that these officials do not engage in any government activities, which further drains the national budget and exacerbates the country’s financial woes.

In a recent report, the U.S. accused the Aden-based government of corruption and a lack of financial transparency, urging it to publish detailed budget documents and disclose debt obligations to promote accountability and transparency in public finance.