The Yemeni riyal fell to an all-time low of 1,770 against the U.S. dollar on Monday in Yemeni-Internationally Recognized Government (IRG)-controlled districts, according to local money traders who described it as a drop likely to drive up prices and spark violence.
IRG and the central bank in Aden officials have not commented yet on the latest drop in the exchange rate of riyal, but they usually blame currency speculation by black-market money traders as well as the Houthi rebels, who deprived the Yemeni government of oil revenue by attacking oil terminals in southern Yemen.
During last January, the riyal reached a record low of 1,600 against the dollar in IRG-controlled districts, two months after it had fallen to a new low of 1,500 against the dollar.
In an attempt to control a chaotic market, Aden central bank has previously shut down unlicensed exchange companies, held public auctions to sell the dollar to local food and fuel importers, ordered financial institutions to submit annual statements to the bank, and linked local exchange companies in a unified remittance system under its supervision. But these measures failed to slow the riyal’s devaluation.
The depreciation of the currency has led to increases in fuel, food and transport costs, forcing millions of Yemenis into poverty, according to local and international aid agencies.
The Yemeni riyal was trading at 215 to the dollar by late 2014 when the war in Yemen broke out after the Houthi rebels took control of the capital, Sanaa.
It reached an all-time low of 1,700 against the dollar in December 2021, but rebounded to 1,200 after Saudi Arabia injected hundreds of millions of dollars into the central bank in Aden.
The rate of the riyal in the Houthi rebels-controlled areas has stayed consistent at 527 against the dollar since late 2016.