Yemen Monitor / Sana’a / Special:
The armed Houthi group has suspended Yemenis from receiving their dollar transfers since the beginning of the week by a decision from the Central Bank in Sana’a affiliated with the group. According to exchange agents in Sana’a who spoke to “Yemen Monitor”, the Central Bank instructed exchange agents and banks to stop receiving dollar transfers weeks ago, but the decision was officially issued on Thursday.
The decision indicates that external transfers in Saudi Riyals are to be delivered in Saudi Riyals with an interest rate not exceeding a quarter of one % of the transfer amount, with the possibility of converting them to Yemeni Riyals, and transfers in dollars are to be converted into Saudi Riyals with the possibility of converting them into Yemeni Riyals at the market rate.
Economic analyst Rashid Al-Ansi said that the Houthis’ decision is a result of a crisis, “the availability of foreign exchange in Houthi-controlled areas, especially dollars, has decreased, especially transfers from Houthi-controlled areas to outside their territories were draining their currency, so they created problems to prevent external transfers.”
He pointed out that the Houthis now “prohibit external transfers out of the country.”
He added that the Houthis’ decision to stop receiving transfers in dollars indicates that there is a major crisis in the dollar supply, indicating a problem caused by the Houthis in their attempt to control the supply and demand of the hard currency. It is a big mistake for authorities to intervene in the supply that the market should control, not the authorities that can control the demand.
And because the Houthis interfered in the supply of hard currencies, all transfers began to reach areas controlled by the legitimate government (internationally recognized), supporting the dollar price in government areas rather than Houthi areas. Secondly, there is trade freedom in government-controlled areas: withdrawal, deposit without pursuing and no fees, so the economy started to recede from Houthi-controlled areas to government-controlled areas.
This comes as financial division in the country has increased with the Houthis making a decision at the end of 2019, banning the circulation of the new editions of the currency printed in Aden in their controlled areas, as the Houthis continued to use the currency from the old edition that most of it has become bad and not tradable, which led to a decrease in liquidity in the group’s controlled areas as most of it was damaged by the residents.
The decision of the Houthis also contributed to widening the gap between their controlled areas and government-controlled areas by creating two different exchange rates for the local currency, leading to an increase in cash transfer fees from government-controlled areas to Houthi-controlled areas by more than 300% of the sent amount. United Nations efforts to bridge the financial divide between the two parties have failed.
