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Yemeni Riyal Stabilization
Improvement in currency value against the US Dollar before and after intervention.
Primary Sources
Cash shortages grip Yemen despite currency stabilisation
Mukalla, Yemen – The Yemeni government’s measures to curb the devaluation of the Yemeni riyal have finally borne fruit, but they have created another problem: A severe liquidity crunch.The government’s central bank, based in the southern city of Aden, has shut down unauthorised exchange firms it says were involved in currency speculation, centralised internal remittances under a controlled system, and formed a committee to oversee imports and provide traders with hard currency.Recommended Stories list of 3 itemslist 1 of 3Men caught competing as women in prestigious South African marathonlist 2 of 3Record number of Rohingya refugees died at sea last year, UNHCR sayslist 3 of 3US House votes down latest effort to curtail Trump’s power to wage Iran warend of listThese measures have helped curb the riyal’s freefall, from about 2,900 to the United States dollar months ago to about 1,500 today, a move that was initially welcomed. But the gains have been short-lived, as public frustration has grown over a worsening shortage of cash in riyals.People across government-controlled cities such as Aden, Taiz, Mukalla and others have said they are facing an unprecedented shortage of Yemeni riyals in the market. Many, particularly those holding US dollars or Saudi riyals, said local banks and exchange firms are refusing to convert foreign currency, or are limiting daily exchanges to as little as 50 Saudi riyals per person, citing a shortage of local cash.This has left many Yemenis unable to access cash or use their savings in hard currency at a time of mounting economic pressure, paralysing businesses and giving rise to a black market where traders exchange foreign currency at more unfavourable rates to the customer.Businesses grind to a haltMohammed Omer, who runs a small grocery shop in Mukalla, said he has spent hours crisscrossing the city’s exchange firms trying to convert a few hundred Saudi riyals he received from customers. “I’ve gone from one exchange to another, and they refuse to exchange more than 50 riyals,” said Omer, a man in his early 50s with a salt-and-pepper goatee. “It’s a waste of time and effort – I’ve had to close my shop.”Yemen has endured an economic meltdown for more than a decade, stemming from a war between the Saudi-backed government and the Iran-aligned Houthis that has killed thousands and displaced millions.Alongside the fighting on the battlefield, the warring sides have targeted each other’s main sources of revenue, leaving both the Hou...
Leveraging remittances for economic recovery in Yemen
In fragile and conflict-affected economies, remittances are not simply financial transfers – they are a core mechanism of household survival. In Yemen, this has been especially true since the collapse of oil exports following the outbreak of civil war. Before 2015, oil revenues generated an estimated USD 2-3 billion annually. As these revenues declined, remittances emerged as Yemen’s most consistent source of external finance. Formal remittance flows are estimated to be USD 4-6 billion, accounting for close to 20% of GDP. When informal transfers are included, total inflows may reach as high as USD 10 billion – nearly double the volume received through formal channels. These flows now exceed foreign aid and foreign direct investment, making remittances the single largest external financial lifeline for Yemeni households.What makes Yemen’s remittance systems resilient to economic shocks?Despite ongoing conflict, economic fragmentation, and international financial restrictions, Yemen’s remittance systems have demonstrated remarkable resilience. Two factors explain this durability. First, informal transfer mechanisms, particularly hawala networks, have adapted to operate across frontlines and in areas with limited financial infrastructure. Second, remittance channels have adjusted to shifting regulatory and economic conditions, allowing funds to continue flowing even as formal banking systems deteriorated.Yet, resilience does not automatically translate into development. With unemployment exceeding 17% and nearly three-quarters of Yemen’s population living in poverty, remittances are overwhelmingly used to meet immediate consumption needs. Approximately 75% of remittance income is spent on food, rent, healthcare, and basic education. This pattern reflects not short-sighted household behaviour, but structural constraints. High inflation, currency instability, limited access to banking services, and the absence of secure savings or investments leave households little room to allocate remittances toward longer-term economic activities.Internal constraints on remittance flowsYemen’s remittance landscape is shaped by internal challenges. Informal hawala, operated by a network of brokers, dominates in part because formal financial services have deteriorated. Banks frequently face liquidity shortages, withdrawal freezes, and operational disruptions, eroding public trust. As a result, many Yemenis perceive formal banking as a risk and not as a safeguard.The fragmentat...
At Security Council, OCHA appeals for unimpeded access as Yemen crisis ...
At Security Council, OCHA appeals for unimpeded access as Yemen crisis deteriorates Earlier this year, the World Food Programme (WFP) together with communities and local partners, launched a new Targeted Emergency Food Assistance programme in Yemen, aiming to reach 1.6 million newly identified food insecure people through food and cash assistance.
The Formation of a Yemeni Presidential Council: An Attempt to Resolve ...
In a surprising and unexpected step, Yemeni President Abdrabbuh Mansur Hadi announced the formation of a presidential leadership council to accomplish the tasks of the transitional phase in Yemen.
