Yemen Faces Protests as Currency Plummets
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Hashim Sheikh
- . July 13, 2023
- . Update: July 13, 2023 5:19 pm
Following a sharp drop in the value of the Yemeni riyal, protests have broken out in many Yemeni cities under the jurisdiction of the internationally recognised government. The currency, stable for months, recently hit a new low of 1,500 riyals per dollar, sparking protests and widespread rage. Businesses shut their doors in protest over the depreciation of the riyal while protesters blocked roads, blocked traffic, and ignited fires. The government is increasingly pressured to stabilise the currency as the economy continues deteriorating.
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The Riyal’s Decline and Escalating Protests
Since the beginning of 2022, when the government relocated to Aden, the Yemeni riyal has maintained an essentially constant exchange rate of 1,200 to the dollar. The announcement by Saudi Arabia of a $1 billion deposit with the national bank helped the currency. However, the riyal’s value started to fall in May and dropped as low as 1,300 to the dollar. The failure of the presidential council to stay in Yemen and the suspension of peace attempts caused the currency to decline.
Frustrated protesters have rushed to the streets, especially in Aden and Al-Mukalla, in response to the deteriorating economic situation and the plummeting riyal. Protesters demanded quick government intervention while blocking important routes and torching tires. Additionally, until the government takes action to stop the depreciation of the currency, trade unions and social media users have called for large-scale demonstrations and civil disobedience.
Government Pledges to Stabilize the Currency
The chairman of the Presidential Leadership Council, Rashad Al-Alimi, promised to handle the depreciation of the riyal and control the exchange markets. He promised to immediately stop the currency’s devaluation during a meeting with the French ambassador to Yemen. Nevertheless, the details of the government’s plans were not made clear.
In the past, the government has responded to currency depreciation by shutting down unregistered money exchange businesses, threatening to ban non-compliant businesses, and giving local traders dollars in return for importing fuel and basic supplies. These actions were taken with the intention of reducing the economic crisis and stabilising the currency.
Impact on Yemeni Society
Yemeni citizens have suffered greatly due to the riyal’s sharp decline in value. Because they are worried about further losses, local traders have said they won’t buy or sell anything until the currency stabilises. The cost of essential goods like bread, sugar, and cooking oil has already increased by 20%, burdening an already underprivileged populace. Small businesses, like grocery stores, are especially impacted because the proprietors have no profit margins.
Root Causes of the Currency Crisis
According to experts, various factors are to blame for the economic crisis and currency devaluation. Drone assaults by the Houthi rebel group on oil installations and their suspension of oil exports have harmed the government’s finances and brought it dangerously close to insolvency. The few alternatives available to the administration for dealing with the currency problem include looking for a fresh financial package from Saudi Arabia and outside donors. However, the Houthis have made circumstances even more difficult by denying the government access to tax revenue from ports and Marib gas, forcing local merchants to import items through Hodeidah. Additionally, they forbid gas tankers from Marib, under government authority, from entering their region.
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Following a steep drop in the value of the Yemeni riyal, Yemen is currently dealing with an intensifying economic crisis and widespread protests. The government is under increasing pressure to control the currency and deal with the crisis’s underlying roots. To stop Yemen’s grave situation from worsening, quick action is required as civilians endure rising costs and economic uncertainty. Yemen would need international assistance and financial backing to solve its economic difficulties and regain its stability.
