DUBAI, Aug 22 — Alongside a grinding seven-year military conflict, Yemen’s government and the Huthi rebels are locked in battle on another front — a currency war that has opened up a gulf in riyal values. Both the government and the Iran-backed Huthis used the same notes until late 2019 when...
DUBAI, Aug 22 — Alongside a grinding seven-year military conflict, Yemen’s government and the Huthi rebels are locked in battle on another front — a currency war that has opened up a gulf in riyal values.
Citizens and businesses in both government and rebel-controlled zones have been left out of pocket by the divergence, but especially those in the former, given rampant inflation there. According to Nasser, other experts and ordinary Yemenis, the gap between the two currency values meant higher transfer costs between the two zones.Yemen’s conflict has split the country between the mostly Huthi-controlled north, and the south under the internationally-recognised government which relocated the central bank to Aden after the insurgents seized Sanaa in 2014.
The central bank in Aden was caught out because it had expected the new notes to eventually spread evenly through both zones, but the concentration of supply in the government zone stoked inflation there and spurred the exchange rate divergence. “Obviously, this new injection of money will affect the economy negatively, increase inflation and affect the citizen’s purchasing power,” Alaa al-Haj, an Aden resident, told AFP.
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