An economist and minister in the Bahah government: The exchange rate in Sanaa is artificial
English - Saturday 24 July 2021 الساعة 04:00 pm
Aden, NewsYemen, special:
Raafat al-Akhali, a fellow at Oxford University's Blavatnik College of Government, said the exchange rate in the north - areas controlled by the Houthi militia - remained artificially strong.
The former minister in the government of Khaled Bahah emphasized that the exchange rate is being maintained in Sana'a by curbing demand and having full control over supply.
From March 2020 to July 2021, the disparity in exchange rates between Sana’a and Aden grew to 40 riyals, 1,000 riyals to the dollar in Aden, and 600 riyals to the dollar in Sana’a.
The prices of food, fuel and services continue to rise in Sanaa and Aden, despite the discrepancy in the exchange rate, which confirms the fake exchange rates in the Houthi militia-controlled areas.
In addition to the paralysis of the macroeconomic and fiscal and monetary policies in Sana’a and its confinement to the commodity and fuel market, and the fiscal and tax expansion, the banking sector suffers from a liquidity crisis in the local and foreign exchange and has almost completely stopped paying salaries.
The prices of services, fuel, gas, education, health and electricity in Sana'a have reached record levels, and the black market controls the supply rather than the official institutions.
The Houthi militia is taking policies designed to limit the capabilities of the Central Bank / Aden to reduce the effectiveness of its procedures, by banning dealing in new banknotes, competition for control of the foreign currency "dollar", and tax revenues for fuel imports.
According to economic reports, 80 percent of the liquidity of the local currency is accumulating outside the official banking sector in the hands of merchants, companies and money exchangers.
The demand of the main importers of commodities and fuel at the country level for dollars from exchange companies in areas under the control of the legitimate government is increasing to finance their imports, with the decline in the ability of the Central Bank of Aden to finance imports, which formed huge downward pressures on the value of the riyal.
