Hadi speeds up the rial's depreciation
English - Thursday 03 December 2020 الساعة 03:05 pm
Aden, NewsYemen, Exclusive:
The rate of depreciation of the local currency "rial" against the dollar has accelerated over the past months, and has intensified since late November, which is alarming, and has pushed millions of people into extreme poverty.
The price of the dollar on Friday night's transactions reached 887 riyals, and 233 riyals against the Saudi riyal; It is driven by the expansionary monetary policy - printing cash - of the Hadi government, according to the latest World Bank report on Yemen's economic outlook.
The World Bank confirmed that the expansionary monetary policy of the Hadi government by printing cash led to an acceleration of the decline in the value of the riyal, and the effect of weakening the currency spread to local prices, which led to the erosion of the purchasing power of the household and private sectors.
He added that there is growing evidence indicating that the widening budget deficit has been funded by overdraft - printing the currency - through the Central Bank of Yemen.
According to a source in the Central Bank of Yemen, Aden, the total cash printed by the government since late 2016, and issued by the Central Bank to the market, amounted to about 2 trillion riyals.
In spite of the huge monetary mass that the Central Bank issued to the market during the past years, it has complained of suffering from a liquidity crisis that has caused irregular payment of salaries of state employees.
The Central Bank of Aden also announced the development of a matrix of priorities for work, led by stopping the deterioration of the riyal's exchange rate, but the Yemeni Monetary Coalition attributed one of the reasons for the deterioration of the riyal to cutting off the closure and reopening of exchange facilities and money transfer networks.
The central bank in Aden had closed all money transfer networks at the end of September, with the aim of launching a new unified transfer network in early October, but it failed to do so, to repeat the same step on November 24.
The central bank says that the aim of the new unified transfer network is to stop the depreciation of the riyal, monitor transfers and comply with the application of international financial system standards, in combating money laundering and terrorist financing.
The Yemeni Monetary Coalition added other reasons for the dollar’s continued rise against the local currency, represented by the decline in oil prices, the faltering of the Riyadh Agreement, and the limited availability of the dollar in the local market.
The coalition, which includes many international organizations, monitors the fluctuation of the Yemeni riyal exchange rate on a monthly basis, adding that among the reasons is also the decrease in remittances from expatriates, and the difference in the exchange rate between Sanaa and Aden by 39%.
The economy continues to suffer due to the impact of the Corona virus, and the collection of non-oil revenues has been affected as a result of the fragmentation of the financial management of government revenues due to the conflict of control over government institutions and collection departments.
