Yemen seeks Saudi cash as plunging currency deepens war woes

Reuters News
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Posted: Jan 16, 2018 6:00 AM

ADEN (Reuters) - War-torn Yemen said it needs a $2 billion deposit pledged by key ally Saudi Arabia in November to stabilize a currency that hit new lows this week, pushing its impoverished people closer to starvation.

Yemen has been divided by nearly three years of civil war between the internationally recognized government of President Abd-Rabbu Mansour Hadi, backed by Saudi Arabia, and the Iran-aligned Houthis.

The conflict has unleashed the world's worst humanitarian crisis, including one of the most deadly cholera epidemics in modern times and economic collapse, which has spread hunger.

Authorities sought to boost liquidity by printing money, but the rial plunged from 250 to the dollar to 350 after the first batch of newly printed notes was rolled out last year. The rial traded for 440 to the dollar by year's end and this week crashed to around 500.

"Government action in this regard is done on several tracks, according to the limited options available, including intensifying communication ... to expedite the completion of the Saudi depository procedures," state news agency Saba quoted government spokesman Rajeh Badi as saying on Monday.

Saudi officials did not immediately respond to a request for comment about the allegedly promised funds.

President Hadi announced on Nov. 11 that Riyadh had agreed to deposit $2 billion into Yemen's central bank to shore up the rial and secure shipments of badly needed fuel.

Hadi's government moved the central bank in 2016 from the Houthi-controlled capital Sanaa to the southern port city of Aden, where the government is currently based.

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Both the central bank in Aden and the one in Sanaa suffer from depleted reserves, but they have played a key role in mitigating widespread economic pain by paying some public sector salaries, as soaring prices threaten to push basic commodities out of reach for many Yemenis.

The Aden authorities accuse the Houthis of plundering the bank's foreign reserves to fund their war effort when it was based in the capital, charges the group and the Sanaa bank deny.

(Reporting By Mohammed Ghobari and Noah Browning, editing by Larry King)