Saudi Arabia deposits $1 bln in Yemen’s central bank

Saudi Arabia is set to deposit $1 billion in Yemen’s central bank on Tuesday, in light of the Yemeni government’s struggles with a falling currency, fuel and commodity price hikes, Saudi Arabia’s state news agency reported.

It has not been clear if the $1 billion was part of the pledged $3 billion support package by the Kingdom and the United Arab Emirates for Yemen’s economy last May.

The Yemeni government had its public finances worsen, after the Iranian-backed Houthis launched a series of attacks on its terminals, which impacted the country’s key revenue source, oil exports, according to Reuters.

The Arab Monetary Fund has signed a $1 billion agreement in support of the Yemeni economy’s reform programme in November.

The Yemeni government raised the U.S. dollar exchange rate in January, which is used to calculate customs duties on non-essential goods by 50 percent, as dollar shortages arose, causing the highest price hike of all time.

Yemeni rial to US dollar exchange rate was recorded at 1,225 on the black market in Aden this Tuesday, traders reported.

The Yemeni government’s central bank resorted to money-printing to finance the deficit, while rival Houthi central bank in the movement’s held areas, where new notes are banned, recorded the rate at around 600 rials to US dollars.

Saudi Arabia leads a military alliance in Yemen, and has been fighting the Iranian-backed Houthis since 2015, after the movement overthrew the Saudi-backed government in the Yemeni capital Sanaa.

The unresolved conflict hit a no-war, no-peace stalemate wall, as the fighting mainly stopped, but the parties have not renewed the UN-brokered truce, which expired in October.

The conflict has claimed the lives of tens of thousands of Yemenis, and left 80 percent of the population dependent on aid and other millions in hunger.