"The reasons behind the currency’s deteriorating value clearly include suspension of the Aden Central Bank’s decisions in July which had put the Houthis under great economic pressure".

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Abdullah Al-Shadli (South24)

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The economic crisis in areas controlled by the Yemeni Internationally Recognized Government (YIRG) has deteriorated to dangerous levels as the price of the US dollar reached over 2,000 Yemeni riyals during October. It is the record lowest value of the currency that was launched after the declaration of the Yemeni Unity in 1990.

This new collapse in the value of the Yemeni riyal threatens to send the prices of basic commodities in the markets soaring. This could throw millions of people into destitution along with other millions who are already living with extreme levels of hunger and poverty, according to reports issued by the UN and humanitarian agencies.

The Government's Conspiracy Claims 

The YIRG denies that this unprecedented decline in the value of the local currency is due to economic reasons. During a meeting with the leadership of the Yemeni Central Bank of Aden on October 16, Yemeni Prime Minister Ahmed Bin Mubarak talked about a “plot” aiming to destabilize the economy.

Bin Mubarak claimed that “the severe and unjustified deterioration in the exchange rate of the national currency poses an existential threat to the national economy and is as equally dangerous as the security challenges that face the country”. According to him, “the collapse of the Yemeni riyal isn’t a result of natural economic factors and doesn’t match the circulated monetary volume”.

On Sunday October 20, the Chairman of the Presidential Leadership Council (PLC), Rashad Al-Alimi, met Bin Mubarak and the economic team to discuss the economic developments and the collapse of the local currency.

The meeting stressed on a package of measures to address the public budget deficit, deter currency speculators, streamline the import bill, control and monitor the money supply, and activate law enforcement agencies to support the Central Bank's independence and its legal policies in managing the banking sector.

On October 21, the Yemeni cabinet called on the international community, especially the Saudi-UAE led Arab Coalition to support the Yemeni government’s efforts to maintain economic stability and control the exchange rates of the national currency in light of the continued cessation of oil exports and the high prices of shipping due the Houthi attacks.

Dire Economic Conditions

In early 2024, the dollar-riyal exchange rate was around 1,584 to buy and 1,594 to sell. Since then, the decline has continued as the Yemeni riyal lost 25% compared to its value in January. Over the past 10 years, the Yemeni riyal has decreased by more than 80% against the dollar. Ten years ago, the exchange rate was approximately 214 riyals. 

In comparison, the exchange rate in areas controlled by the Houthis has been stable for years – at around 533 to buy and 535 to sell. Additionally, the humanitarian situation continues to be horrific across the country. Despite the collapse of the local currency and the unprecedented hike in the prices of food products, the salaries of state employees are still similar to the pre-war payment rates. The monthly salary of a teacher is $50 at best.