Yemeni riyal regains value

A currency trader in Yemen at his shop in Sanaa. [Khaled Abdullah Ali Al Mahdi/Reuters]

A currency trader in Yemen at his shop in Sanaa. [Khaled Abdullah Ali Al Mahdi/Reuters]

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Economists in Yemen have attributed the increased value of the Yemeni riyal to a rise in confidence following the formation of the unity government in December.

The increase in the exchange rate of the riyal against the dollar rose from 245 to 215 riyals in mid-December marked the first time the riyal gained value since political demonstrations began in February.

"The low exchange rate of foreign currency is not a direct result of economic conditions but is a result of the stability and political calm following the formation of the national reconciliation government, which had a positive effect on the market. Donors also pledged to support Yemen's stability and the development process," said Mohammed Saad al-Rawdhi, under-secretary for the Central Bank of Yemen.

Al-Rawdhi told Al-Shorfa that the central bank also took action that prevented the riyal from falling to as low as 300 riyals per dollar.

"The bank undertook several measures, including direct sales to currency exchange brokers and pumping dollars into the market via commercial banks," al-Rawdhi said.

Claims of market manipulation

Some citizens complained about the unwillingness of foreign exchange businesses and money changers to sell dollars, which limited consumers' ability to buy dollars when the price declined.

Abdo Mohammed, a University of Sanaa student, said he visited several foreign exchange firms in Sanaa to get $1,000 to send to his brother who is studying for a master's degree in Malaysia. He said the exchange rates were too high despite the drop in the dollar's value.

"I purchased dollars at a high price, exceeding 238 riyals per dollar when the market price did not exceed 220 riyals per dollar at the time," Mohammed said.

Some economists said the decline in the dollar's value against the riyal may have been artificially contrived by large exchange firms.

"Currency exchange firms might resort to speculation by injecting some of their reserves into the market to lower the price of the dollar to low enough levels to encourage people to return the dollars to the market that they withdrew from banks and stashed away in their homes. The exchanges then raise the price of the dollar and achieve fantastic profits," economist Abdul Aziz al-Absi told Al-Shorfa.

'Dollarization' of Yemeni market

Dr. Taha al-Faseel, a professor of economics at the University of Sanaa and advisor to the minister of industry and commerce, told Al-Shorfa that increasing a country's productivity enhances the strength of the local currency.

"The purchasing power of the Yemeni riyal declined considerably because of the lack of confidence in the market, which led to a 'dollarisation' of the Yemeni market. The dollar supplanted the Yemeni riyal in transactions and even riyal-based transactions were based on its exchange rate against the dollar. That is because Yemen is a consuming not a producing state," he said.

Al-Faseel said falling demand for the dollar and a decline in imports in recent months increased reserves in foreign currency, especially the dollar.

"Another contributing factor was the stability that followed the formation of the government and the military committee's reduction of security tensions, which assured the market, raised optimism among the public, and led to the drop in the exchange rate against the Yemeni riyal," he said.

Al-Faseel said the central bank should strengthen regulation of foreign currency exchange firms, enhance the role of commercial banks in financing imports, and stabilise exchange rates at their current levels to prevent another spike in the price of the dollar.

"Yemen is entering a period of increased demand for imports after a year of stagnation, which could lead to an increase in demand for the dollar relative to its supply,” he added.

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  • READER COMMENTS

    ابو براء

    2012-1-26

    The situation in Yemen is improving towards prosperity and a bright future for this country in which life is returning. The state and the new government have started to exercise their functions very well, and the people have returned to work again. Service establishments have begun to conduct business; investment has started and the Yemeni economy has begun to rise and recover in a manner that will start construction, reconstruction and reduce the suffering of Yemeni citizens, who are weary of the recent events. So Yemen is fine and will see the development for the better in this good era. The stability will improve the Yemeni economy, and this will allow the Yemeni citizen to live in the prosperity that was long anticipated.

  • حكيم جابر

    2012-1-26

    The situation in Yemen will witness a lot of change for the better and better in this stage, God willing, especially now that the stability of internal security in Yemen has been achieved. This appeared to recover in a manner that is in the best interest of Yemen and its people. The stability of the situation will be in the best interest of Yemeni stability that suffered greatly from the decline in the past months, because of protests and clashes that took place in Yemen to overthrow the regime of Ali Abdullah Saleh. The condition today is ascending towards internal stability in Yemen, after the departure of the head of the regime and the formation of new government. It will rearrange the situation in Yemen, to return Yemen to its normal condition. This will bring prosperity, dignity and pride back to its families, and will bring about a more prosperous life than there was in the time of the ousted regime.

  • عبدالخالق عبدالله

    2012-1-26

    Yemen and its people, for more than three decades, have gone through a lot of economic and security problems because of the policies pursued by the failed dictatorial regime in Yemen. This regime has brought the people of Yemen all this suffering and pain because of the backwardness and poverty that reached broad segments of the poor Yemeni people. They lived through the most difficult humanitarian conditions under the dictatorship, which denied them glory and dignity, and kept them from gaining knowledge of the development witnessed by the entire world and walking in the footsteps of modernity. Everyone in Yemen aspires to that today, especially after the rejection of tyranny and dictatorship in Yemen, with Ali Abdullah Saleh being forced to leave power by the courage of the people of Yemen. They can no longer bear such circumstances in which they lived throughout the period of the one-party rule.

  • شعيب

    2012-1-24

    Yemen has witnessed a state of economic paralysis since the outbreak of protests almost nine months ago. This has affected people’s living conditions. In fact, thousands of workers have lost their jobs. Thus, the rate of unemployment has increased in Yemen. Thank God that Yemen has become one of the richest countries, especially since it contains oil, gas, fish and agricultural wealth; large and fertile lands that have been neglected. This is in addition to the human and tourism wealth. Besides, Yemen has enjoyed a strategic wealth, i.e. a strategic location and the road of Bab Al-Mandeb. Thus, if the government gave these lands to the youth, there would be many job opportunities. And it is important to rely on the local manpower instead of foreign ones.

  • رعد حلان

    2012-1-24

    The cities of Yemen were significantly quieter over the past few days, which coincided with the formation of the government of National Reconciliation. Meanwhile, the atmosphere is still tense in some areas. In fact, there is some tension between the Guard, the police and security on the one hand, and armed individuals who are loyal to the tribal leader Sheikh Sadiq Ahmar, the Sheikh of the Hashed tribes, which opposes the regime, on the other hand. That was due to the lack of trust between the two sides. Moreover, the young protesters against the regime continued their sit-ins and demonstrations during the past few hours. They called on the international community to intervene in order to stop human rights violations in Yemen and bring those responsible to trial. What has been achieved in Yemen so far are the first fruits of the people’s struggle. The government of National Reconciliation, arising from the agreement of a political settlement in accordance with the Gulf initiative and its operational mechanism, has started the exercise of its functions formally. The burden of the new Yemeni government is undoubtedly heavy. Indeed, the country has gone through a full economic paralysis in the past few months. This has complicated a situation which was already difficult. Therefore, the top priorities are to bring life to the state again and to provide the basic services, such as water, electricity and oil products. The new government should also remove all the armed manifestations, promote the factors that could ensure security and stability, consolidate social peace, provide the necessary care to the families of the martyrs, and treat the hundreds of wounded people.

  • صباح حسن

    2012-1-23

    The problem of electricity is the natural result of the conditions experienced by people in Yemen during the outbreak of the popular peaceful revolution against the ruling regime in the country. The revolution led to the suspension or decline of most human services, as well as industry. The latter in turn greatly affected the country's economy. This situation increased the severity of poverty and need in all parts of the country, due to the unstable security conditions. The result was the loss of many of the services, which led to various major crises in Yemen, including the problem of electricity. This service disappeared in the country, except for rare occasions. Still worse, living conditions in Yemen are really difficult as a result of warming weather in the country. Indeed, the situation has become really unbearable for the citizens, because of the lack of electrical appliances. Power failures are more and more frequent, so much so that electricity is called “the absent service,” making most of Yemen's population live in darkness. In addition, they suffer greatly from the extreme heat.

  • جمال أسماعيل

    2012-1-23

    I expect the best of things for the future of Yemen, God willing, if is the work is done in cooperation with solidarity, and that the future of Yemen and the Yemeni people would be better than before. For this reason everybody should stand together and not allow any outside interference to cause any violations among the people or between people and the government or anything else that urges the creation of chaos and confusion in the country. For this reason, it is very important to be heading to whatever contributes to the development of the State of Yemen and improves the situation there and to give priority to accelerating the implementation of all the requirements of the people of Yemen and toward the achievement of justice, equity and the provision of all services needed by the people who lack it, for being a very important aspect in their lives, especially after they have had many of their rights usurped. For this reason, everybody should keep an eye on the achievement of the goals that improve the position of the country and the people in the future, and stay away from everything that is harmful and can cause disasters in the country, and to fight against all the terrorist elements, who do not want any good for the people of Yemen. The government should strive to provide comfort, stability, tranquility, peace and security in the land of Yemen. Because the people there are tired, because they have suffered from poverty, hunger, corruption, ignorance, disease, destitution, deprivation, dereliction and negligence, it was time to change all this for the better, not vice versa.

  • عمر المقعادي

    2012-1-23

    Everyone knows that the rate of poverty in Yemen has exceeded the reasonable limits. In fact, Yemen is one of the poorest Arab Peninsula countries. Thus, the Yemeni government must do its utmost to rescue the country from this dire situation. As far as I am concerned, in order to revive the Yemeni economy, and because this poverty will decrease if the economy improves, we have to revive the industrial sector and work on the success of the foreign investments in Yemen. Consequently, this will eradicate the widespread unemployment in Yemen. In fact, finding job opportunities for the unemployed youth will decrease the poverty rates. In addition, the government must do its utmost to fight unemployment and save citizens from the extreme poverty situation from which the majority of Yemenis are suffering.

  • كمال صالح

    2012-1-22

    What has taken place in Yemen is a good thing, and the other countries should do the same thing that former President Ali Abdallah Saleh did. His carefully arranged departure has helped in preserving security and stability in Yemen, which has seen a considerable improvement in terms of its economy, and also as a result of the stability that Yemen has witnessed on its soil, following the pains, hardships, sacrifices, harshness and barbarity that took place there. The situation is starting to become better than it was previously. Our hope is that there will be a radical and complete change in all the aspects of life for the Yemeni citizens. The new government should carry out its responsibilities vis-à-vis the Yemeni people, and ensure the provision of all the services, and respond to their demands, and eradicate poverty, unemployment, hunger, corruption, ignorance, backwardness, negligence and neglect. This is what we hope for all the other countries as well.

  • عادل ثائر

    2012-1-22

    We wish that the Arab citizen in Yemen could enjoy a better, happy and good life. We hope that Yemen will restore its old name, “The Happy Yemen,” at the hands of its children. They are keen on protecting their country and working hard to develop it, through redoubling their efforts, their ceaseless efforts and the keenness to benefit from its natural resources and using them to serve their country and open new horizons for the Yemeni youth. These will provide them with sufficient jobs in order to improve their living conditions and contribute to the different national projects, which will have a strong influence on the Yemeni economy. We hope that Yemen will become one of the most blessed states on earth.

  • مريد

    2012-1-22

    After the opposition and former Yemeni President Ali Abdullah Saleh signed the Gulf Initiative, the country witnessed good developments as to the internal affairs, and the country started experiencing more stability in the Yemeni economy, after the formation of the National Coalition Government. The early indications of the rise in the value of the currency clearly had a positive impact on the stability of the security situation. Of course, these developments are delightful and they should please all the people who want the best for their fellow humans everywhere. We expect more stability and calm in Yemen, which faced very difficult political conditions that led to weakness of the infrastructure of Yemen in all fields. We hope that normal life will return through the solidarity of all Yemenis and their insistence on reconstruction of their country, which was destroyed during the past period. We should commence a campaign for construction and strengthening the infrastructure through returning to their work in all fields in the public and private sectors. The Yemenis need to benefit from the experience of the other people, who achieved development and who built their homes after getting rid of the dictatorial regimes, which had been oppressing them for many years. All Yemenis need to be united and to support their new leadership, to support it and to help it succeed in achieving the democratic rule, as well as closing the painful page of the past and starting a new page of development and utilization of all the human and financial resources within the process of building the new home.

  • سعاد السامر

    2012-1-21

    Yemen is going through a stage which will be better, God willing, in the coming days, especially after the departure of the former president Ali Abdullah Saleh. He was not fit to be the president of Yemen, because he provided nothing for the country. Quite the contrary, he was the reason for the deteriorated conditions of the country in different aspects, whether economic, service, cultural, employment, unemployment and other remnants of his rule, because he did not deal with any of these matters. Many people were hoping that he would develop the country and improve its economic condition; but nothing happened and we did not get anything during his time in office. Therefore, the people rose up and had their say and they caused his departure. Thank God the country today belongs to the people; it is not controlled by a dictator. There is a new government made up of the different people of Yemen and its spectrum, which we trust, as the rule will be common and the work will be done by everyone in order to improve the situation of Yemen, especially the economic condition. This causes great poverty and unemployment in Yemen. In addition to that, we want to implement the projects that have been announced as soon as possible, God willing, and there will be great investments in Yemen and a real stage of development and common work by everyone, in order to elevate the level of the country.

  • مهند احمد

    2012-1-21

    As Ali Abdullah Saleh left quickly, the county began to return to its stability again and security situation is returning to normal. This will allow the opportunity to the government to work faster and the investment companies to come as soon as possible. It will also allow the return of the United Nations so as to help the Yemeni people until the situation and life in Yemen have improved. This will greatly help in saving many destroyed families, which have been destroyed because of the crisis experienced by the country and the economic impact left by this crisis on the country and the people. The state of Yemen now is starting to recover and the future will be better, God willing.

  • عبد الفتاح

    2012-1-20

    Ali Abdullah Saleh insists on continuing to destroy the economy till the end by smuggling the money in hard currency outside Yemen, since the start of the strikes in 17 Yemeni governorates calling for him to step down from power. He gives away the money of the Central Bank here and there to buy off people and gain their loyalty. The issues of fuel and gas are the least of his priorities as he intentionally ignores them and makes them a tool for the suffocating crises, with the intention of harming the people. Therefore, the mere departure of Ali Abdullah Saleh alone constitutes at least a halt to the economic bleeding. Through the formation of the new government, Yemen will finally live in the hoped-for stability, which in turn will contribute directly to economic improvement.

  • هبة هاني

    2012-1-19

    In order to reduce poverty, the Yemeni government works in two directions. The first is to improve the living conditions of the employees of the governmental administrative system and security and armed forces by increasing their salaries. The second is to broaden the network of social security for poor families. The governmental procedures for increasing salaries are divided into two tracks. The first is to reduce the income tax, which is worth 15-25% of the salary. In addition, it is to implement the third stage of the national strategy of salaries and wages adopted by the Yemeni government three years ago, in order to gradually raise the salaries of the government employees in the civil, military and security systems. It also aims to raise the minimum wage above the poverty line, which equals a hundred dollars, in addition to giving bonuses with an annual raise for each employee. The second track is to sponsor five hundred thousand families to receive monthly aid from the government to be able to afford their basic needs. The number of poor families receiving benefits from the fund has exceeded a million and a half families.

  • صباح عبد القادر

    2012-1-14

    It is true that Yemen is one of the most backward and poorest Arab countries. We have a poor standard of living, and an economic condition that is worse than bad. This matter is not new today, but it has existed within our country. Yemen is called Yemen Al Saed, because it has never gotten involved in external wars and it does not suffer from them. We do not have wars, but we have a bad economy, and we suffer from this poverty and the percentage of poor people is great. The reason is clear now, as everybody thought, which is Ali Abdullah Saleh and his traitorous leaders, who have led the country and destroyed it throughout these years. All countries develop and advance while their leaders steal the country’s money and do not carry out any projects or development or economic improvement. But if this were any other country, we would see it stable today. Along with the existence of the government and not interfering in wars, it would be at the top, except for Yemen, because we do not have honorable people leading the country. Therefore, the people have rebelled against Ali Saleh and his government, because there is no benefit to keeping them at all. Thus, I hope that the coming period will be better and Yemen can be developed like the rest of the neighboring countries, the Gulf countries, and that we could address the economic condition and start with a campaign of construction, reconstruction and investment, as well as killing and eliminating al-Qaeda and its hideouts throughout Yemen. We are a country that is suffering, and above all, mean people come and want to exploit the situation, because they believe that they have a greater opportunity in Yemen to spread and control the conditions; but they are mistaken.