Yemen Monitor/Newsroom:
Dr. Mohammed Ahmed Ba-Amr, Professor of Economics at Hadramawt University, stated that the recent appreciation of the Yemeni Rial is fueled by significant foreign currency inflows rather than a domestic liquidity crunch.
In a statement to Hadramawt TV, Ba-Amr identified several key financial injections that have bolstered the local currency:
- $90 million in Saudi support dedicated to the general budget and public sector wages.
- 600 million Saudi Riyals (approx. $160 million) directed toward salaries for security and military forces.
Combined, these inflows totaling roughly $250 million have strengthened the Central Bank of Yemen’s (CBY) reserves and increased the supply of foreign exchange in the market.
Dr. Ba-Amr clarified that the current improvement is sustainable because it is linked to real external inflows rather than a temporary shortage of local currency. He noted that the domestic liquidity issue is a matter of “misdistribution” rather than a physical lack of cash, a factor the Central Bank considered when adjusting exchange rates.
The Central Bank has adopted market-based mechanisms to manage the currency, stabilizing the exchange rate at 410 YR for buying and 413 YR for selling against the Saudi Riyal.
According to Ba-Amr, the stability is further supported by:
- Strict Monetary Reforms: Measures to curb currency speculation.
- Import Regulation: The establishment of a committee to organize and fund imports.
- Digitalization: Moving toward digital banking operations as part of a comprehensive reform package.
The expert predicted that the current exchange rate will remain stable for the foreseeable future. However, he emphasized that for citizens to feel the impact, the Ministry of Industry and Trade, along with local authorities, must enforce strict price controls on goods. He warned that without active field oversight, prices often remain high even when the currency stabilizes.
