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Yemen says Saudi Arabia to deposit $2b to support currency

Yemen’s currency declined last week, hitting 380 against the US dollar for the first time since Al Houthi grab of power in 2014

Gulf News

Al Mukalla: President of Yemen Abd Rabbo Mansour Hadi has said Saudi Arabia has agreed to deposit $2 billion into the central bank in the port city of Aden to shore up the deteriorating Yemeni rials, the state-run Saba news agency said on Sunday. Briefing his government about the outcome of his short visit to the Saudi capital, Hadi said the kingdom agreed to his country’s request to deposit the amount in the bank to “boost financial stability and strengthen confidence in the national economy”.

Last week, Yemen’s currency declined at a record speed, hitting 380 against the US dollar for the first time since Al Houthi grab of power in 2014. Due to the current war between Hadi’s government backed by the Saudi-led coalition and Al Houthis, the country’s exports of oil and gas have been halted, depriving the country of a major source of hard currency. To make things worse, Aden-based government last year accused the rebel movement of plundering the country’s foreign reserves, a move that prompted Hadi into ordering relocation of the central bank to Aden. Government also blamed Al Houthis for tapping into a previous $1 billion deposit from Saudi Arabia and used the money in their military efforts.

Economists predict that the Saudi deposit would have a positive impact on the staggering economy and would likely act as a brake on deterioration of the rial. On Monday, Yemeni rial was trading at 320 against the dollar, rising from 330 in the previous days. Mustafa Nasser, a Yemeni economist, said the Saudi deposit would support the country’s currency and would restore confidence in the economy. “This direct deposit is crucial to address depletion of cash reserves in the central bank over the last couple of years,” Nasser said on his Facebook page. He advised internationally recognised government to resume exporting oil from areas under its control, attract foreign aid and benefit from remittances by Yemenis abroad. Despite taking control of all major oilfields in Hadramout, the government has not been able to resume exports, citing security concerns and renovating some fields in Hadramout.

Meanwhile, warplanes from the Saudi-led coalition struck military sites in Sana’a controlled by Al Houthis and their ally ousted president Ali Abdullah Saleh. Residents reported hearing heavy explosions shaking military camps and arms deports on Sana’a mountains. Similar heavy air raids targeted Al Houthi fighters on battlefields in Jawf, Hajja, Sana’a, Marib and Shabwa.

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