The World Bank: Houthi ban on banknotes raising food prices in Aden
English - Wednesday 26 February 2020 الساعة 02:57 pm
Aden, Newsyemen
The World Bank said that the Houthi-banning of the Houthi militia in dealing with new banknotes after the 2016 edition in its areas of control pushed prices in Aden during January to rise following the sharp fall in the value of the riyal.
The World Bank stated in its latest update, "The Latest Economic Developments in Yemen - January 2020", that the difference in the exchange rate between Sana'a and Aden has affected the retail prices of foodstuffs in Yemen, whether in terms of level or direction.
According to the Yemen Food and Agriculture Security Group, retail prices for foodstuffs increased markedly in January in the southern governorates, which are under government control in Aden.
The actions of the Houthi militia, regarding the ban on the circulation of new banknotes, exacerbated the devaluation of the riyal in Aden.
The monetary measures taken in Sanaa have caused an imbalance in the cash circulation process in a significant way, such as a significant decrease in the volume of liquidity circulating in local markets, and encouraged speculation on the price of new riyals against the old riyal, which in turn led to widening the gap in the exchange rates between Aden and Sanaa.
In the first month after the start of the implementation of monetary procedures, the value of the riyal in Aden declined sharply, reaching during this period to about 680 riyals per dollar, due to reasons likely to increase the flow of cash from the new printed papers, including due to the embargo in the north.
The market's reaction to the difference in the value of the old and new riyals in the north and south was a huge increase in the cost of financial transactions between the markets under the control of the warring parties.
According to the World Bank report, available information indicates that by the end of January, exchange costs through commercial banks in Sanaa reached up to 17% on the exchange of cash transfers from areas under government control in Aden.
