Al Jazeera Net correspondents
The Yemeni riyal is witnessing a record collapse for the first time in its history, as the price of the dollar reached about 2,200 riyals, driven by the continuing conflict between the internationally recognized government and the Ansar Allah group (Houthis).
This unprecedented decline comes after the price of the dollar was equal to 215 Yemeni riyals during the outbreak of war in early 2015.
The continued collapse of the riyal led to citizens going out during the past days in demonstrations in the governorates of Aden and Hadramaut in the south of the country, denouncing the deteriorating living conditions and rising prices.
Timeline of decline
- As a result of the repercussions of the war, the deterioration of the Yemeni currency began during the year 2015, when in August the price of the dollar reached 225 riyals for the first time.
- In October 2015, the currency continued to decline, and the price of one dollar reached 280 Yemeni riyals.
- On September 18, 2016, Yemeni President Abd Rabbuh Mansour Hadi ordered the transfer of the headquarters of the Central Bank from Sanaa, which is under the control of the Houthis, to Aden, the temporary capital of the government.
- Due to the financial conflict between the government and the Houthis, the price of the dollar on November 2, 2016 reached 300 riyals.
- On January 6, 2017, the Central Bank of Aden (internationally recognized) received the first batch of new banknotes printed in Russia amounting to 200 billion Yemeni riyals, which were printed without a cash cover, according to economists.
- On August 15, 2017, the Central Bank of Yemen in Aden decided to liberalize the currency exchange rate from 250 riyals to the dollar and adopt the principle of floating according to supply and demand, and at that time the price of the dollar reached 370 Yemeni riyals.
- As a result of the abundance of newly printed currency and the scarcity of foreign exchange, and following the floatation decision, the Yemeni riyal declined, and the price of the dollar reached 510 riyals for the first time on December 29, 2017.
- On January 17, 2018, Saudi Arabia announced a financial deposit to Yemen worth two billion dollars, to protect the Yemeni riyal from further decline. Affected by this deposit, the price of the Yemeni riyal improved directly against foreign currencies, and the price of one dollar became equal to 410 riyals after reaching 510 riyals.
- In November 2018, the price of the dollar reached 480 Yemeni riyals, and the following month the dollar was worth 530 riyals.
- During 2019, the riyal witnessed relative stability in areas controlled by the legitimate government, between 500 and 570 riyals, until the price of the dollar reached 600 riyals at the end of the year.
History of monetary division
In December 2019, the monetary division began between the government and the Houthi group, as the latter issued a decision prohibiting the circulation or possession of banknotes printed by the government.
The group attributed its decision to the fact that “the circulation and possession of the new cash denominations printed by the government constitute harm to the national economy.”
This decision caused a gap and difference in the price of the old currency and its new counterpart, and the price of the Yemeni riyal became different between the areas of government influence and those under the control of the Houthis.
- From the beginning of 2020 until the beginning of September of the same year, the local currency continued to deteriorate until the price of the dollar reached 837 riyals in areas under the control of the legitimate government, and in areas under Houthi influence, the price of the dollar was 599 riyals.
- During the formation of a new Yemeni government on December 18, 2020, the riyal witnessed a noticeable improvement in the areas under its control, and the price of the dollar reached 750 riyals.
- On December 27, 2020, the currency improved in government-controlled areas, and the dollar reached 656 riyals.
- At the beginning of 2021, the Yemeni riyal collapsed again, and the dollar reached 750 riyals, and the currency continued to deteriorate until the price of the dollar at the beginning of December of the same year reached about 1,700 riyals, the highest deterioration in one year.
- Following the issuance of a decision to change the leadership of the Central Bank in Aden at the beginning of December 2021, the Yemeni riyal returned to improvement and the dollar reached 1,255 Yemeni riyals.
- During the first three months of 2022, the currency price stabilized, and the dollar was around 1,250 riyals.
- After the formation of the Presidential Leadership Council in April 2022, the Yemeni currency improved and the price of the dollar became 670 riyals, but the deterioration returned again until the dollar reached 1,200 riyals at the end of this year, driven by the cessation of oil exports in areas of government influence after attacks launched by the Houthis on oil ports in the south of the country.
- In 2023, the currency continued to decline, and the price of the dollar in July reached about 1,420 Yemeni riyals.
- On August 1, 2023, new financial support to the Yemeni government was announced, provided by Saudi Arabia, worth $1.2 billion, to finance the general budget and support the local currency, but the Yemeni riyal continued to deteriorate, and the price of one dollar reached 1,460 riyals at the end of the same month.
- At the beginning of November 2023, the price of one dollar reached 1,520 Yemeni riyals.
- The currency continued to deteriorate in 2024, until the price of one dollar reached about 1,750 Yemeni riyals in May of this year.
- In October 2024, the currency declined at a historic record, and the price of the dollar exceeded 2,000 riyals for the first time.
- At the end of November 2024, the price of one dollar reached 2,070 riyals, which prompted the government to make calls to international donors for urgent financial support to stop the collapse of the currency.
- On December 27, 2024, Saudi Arabia announced the provision of new financial support to Yemen worth $500 million, but the Yemeni riyal continued to deteriorate until it reached about 2,200 riyals in mid-January 2025.
What is behind the collapse and division of the currency?
Mustafa Nasr, head of the Center for Studies and Economic Media, told Al Jazeera Net that the main reasons for the division of the Yemeni currency include:
- The Houthi group made a decision in 2019 not to deal in the cash currency issued by the Central Bank in Aden, which it called the “new currency” printed during the war, which led to two different prices for the currency.
- Taking multiple measures from each party to prevent the transfer of currency to the areas of the Houthi group.
- Decisions taken early last year by the Central Bank of Yemen regarding transferring banks and withdrawing old currency.
Mustafa Nasr adds that the escalation of conflict and monetary division until this moment has caused major problems, and he said that this has created great suffering for citizens in the transfer process, especially with the presence of speculation and large monetary differences that some exploit, which is considered a crime added to economic crimes, according to his description.
Regarding the future of the Yemeni riyal, the economic expert pointed out that the continuation of the war and the monetary division between the two sides of the conflict will double the size of the challenge in the status of the national currency, especially since local production has declined significantly.
He stressed that he is suffering from a scarcity of revenues, a cessation of oil exports, and a decline in remittances and foreign aid, and therefore the riyal will face a major and continuing challenge during the coming period.
He explained that there are attempts by the Central Bank to sell foreign exchange from the recent deposit provided by Saudi Arabia, but they are not a permanent solution, stressing that permanent solutions require that there be stability and the restoration of exports and significant regional and international support until the currency stabilizes and returns to its normal state.
