Local Currency Collapse Sparks Angry Protests

Popular angry protests broke out across different parts of the country – in liberated areas and those areas under the Houthi militia control –  due to the ongoing deterioration of the Yemeni rial.

On Sunday, protests broke out in the liberated cities of Aden, Dhale, Lahj and Shabwa. One person was killed when gunshots were fired during a rally in the city of Qaataba in the Dhale province.

Protesters called upon the legitimate government to intervene and put an end to the deterioration of the economy and prevent the collapse of the Yemeni rial. Main streets and roads were blocked, however, by the nightfall, it was calm again.

In the militia-controlled capital of Sanaa, protests were in the shape of closing and shutting the shops of currency. Meanwhile, the Iranian-backed militia has sought to purchase hard currency and smuggle it overseas for the sake of weapons deals. They had also imposed tough restrictions on the transfer of currency from regions under their control to liberated ones. Observers blamed this tactic for compounding the economic crisis and contributing to the rial’s collapse.

Wholesale merchants in the capital Sanaa were quoted by a number of media outlets saying that they have refused to sell their products in local currency, demanding instead that they be allowed to sell them with any other one, despite Houthi warnings against such a move.

For its part, the legitimate government has called for holding an extraordinary meeting to discuss possible solutions, restore stability in the banking market and ensure that prices in the country return to normal.

Prime Minister Ahmed Obeid bin Daghr called on the cabinet to meet in Riyadh to hold the emergency session, government sources told Asharq Al-Awsat.

Bankers told Asharq Al-Awsat that the rial dropped to record lows, reaching 650 to the dollar. With that, the Yemeni currency has now lost nearly two thirds of its value since the Houthi coup in 2014.

The central bank in Aden had previously taken several measures to stop the collapse of the rial, including pumping hard currency in the market and restoring support for the import of vital goods. It also cracked down on unregistered currency exchange shops. None of these measures, however, succeeded in countering the rapid economic collapse.

Economic observers told Asharq Al-Awsat that the government’s efforts to contain the crisis are doomed to fail as long as Yemen is not allowed to restore its oil and gas exports. They also stressed the need to boost liquidity in the hard currency and find a mechanism to import goods.

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