The crisis in Yemen's monetary system is deepening poverty in the country

The conflict in Yemen has not only fragmented the territory, but has also given rise to a parallel monetary system that exacerbates poverty and aggravates the humanitarian crisis in the country. The division between the areas controlled by the Houthis in the north and those administered by the internationally recognised government in the south has led to marked disparities in exchange rates, purchasing power and access to basic goods, especially during the month of Ramadan.  

Since the outbreak of the conflict in 2014, Yemen's economy has been dragged into an abyss of instability. The Houthis, who control the capital Sana'a, banned the use of the new Yemeni riyal banknotes issued by the southern government based in Aden, thus creating two distinct monetary systems. This division has caused an alarming divergence in the exchange rate: while in the north the riyal is trading at 535 to the dollar, in the south the figure soars to 2,330 riyals to the dollar. 

The consequences of this disparity are devastating for citizens. Abu Bakr al-Sayed, a resident of Aden, describes how he has lost between 60% and 70% of his purchasing power. ‘Living conditions have deteriorated greatly due to the collapse of the currency and the division between Sana'a and Aden in terms of the value of the dollar and other currencies,’ he explains.  

The currency crisis has also seriously affected money transfers within the country. Journalist Ali Al-Gharbani points out that sending 100,000 riyals from Aden to Sana'a results in the loss of up to 80% of the value, a reflection of the financial disintegration that has affected both individuals and businesses. 

The justifications of both sides reinforce the complexity of the conflict. The Houthis defend the prohibition of the new banknotes as a measure to curb inflation, while the Aden authorities argue that the printing of money since 2017 has been necessary to pay salaries and mitigate the liquidity crisis. 

The director of the Yemen Banks Association, Mahmoud Qaed, emphasises the enormous challenges facing financial institutions in a divided country and has called for the banking sector to be protected from the political conflict. ‘We have made numerous appeals to international organisations and the monetary authorities in Aden and Sana'a, urging them to work together to keep the banking sector free from political tensions and allow it to operate professionally in the service of all citizens,’ he said. 

Meanwhile, the population continues to bear the brunt of this crisis. During Ramadan, the tradition of generosity and hospitality clashes with the harsh reality of rising prices and declining incomes. Yemen today is experiencing not only the tragedy of an armed war, but also that of a monetary war that is fragmenting the country and perpetuating the misery of its people.