Yemeni Rial Plummets as Government Funds Diverted to Groups
Anonymous banking sources told Khabar Agency that the US dollar's exchange rate hit 2,346 rials on Thursday, while the Saudi riyal surged to 615 rials. The local currency's value continues to erode daily amid hyperinflation and dwindling public trust.
In a statement issued Wednesday from its Aden headquarters, the Central Bank of Yemen (CBY) partially blamed the collapse on Houthi-led assaults on state revenue streams, particularly targeting oil infrastructure since October 2022. The attacks have crippled Yemen's primary source of foreign currency, exacerbating the economic crisis.
The CBY also condemned rampant illicit revenue practices, urging the internationally recognized Presidential Leadership Council (PLC) to channel all state funds into official central bank accounts. 'Diverting revenues to parallel entities undermines fiscal stability and national priorities,' the statement warned.
In a rare admission, the bank acknowledged that significant government income is being siphoned by armed factions and corrupt networks, exposing systemic graft that has hollowed out institutions. Meanwhile, over 17 million Yemenis face acute hunger as food prices skyrocket.
Economic analysts confirm that staple foods like wheat, rice, and sugar now sell at 300% above pre-war levels. With cash reserves depleted, families increasingly rely on piecemeal purchases, unable to afford bulk quantities. 'The rial's collapse isn't just economic—it's a death sentence for millions,' said a local trader in Aden.
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The Yemeni rial has plummeted by 72% in value since 2018, hemorrhaging nearly a third of its worth annually despite a $500 million Saudi deposit meant to stabilize it, according to the World Food Programme. This currency implosion has fueled spiraling hyperinflation: fuel prices have surged 33% and food costs 28% compared to 2024, part of a devastating 400% price explosion since 2018. "My salary is now equivalent to just $33, compared to $336 before the war, while the price of a bag of flour has surged from YR3,000 to over YR50,000". Civil servant Nabil Mohammed Saleh said. This has driven university academics in Aden, Lahj, Abyan, and Shabwa to protest on May 5, demanding salaries commensurate with pre-2015 purchasing power. Deeper Causes Than the War Economic experts contend that the crisis extends far beyond the war. 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"As a potential solution, he advocated implementing a unified exchange rate to reduce the disparity between the competing currency versions - though he acknowledged this might drive Houthi authorities toward informal financial channels". Experts have outlined a dual-track roadmap to salvage Yemen's economy, prioritizing urgent revenue generation alongside structural overhauls. First, resuming oil and gas exports—the state's fiscal backbone—could stem the bleeding, while creating a sovereign wealth fund would channel resource revenues into long-term stabilization. Concurrently, tightening banking oversight and cracking down on currency smuggling are critical to halting the financial system's disintegration. Reforms must also target systemic rot: imposing strict revenue controls, abolishing dollar-denominated salaries for officials and unifying the fractured currency system to curb hyperinflation. 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US says Chinese satellite firm is supporting Houthi attacks on US interests
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