The rivalry over the banks is throwing Yemen’s financial system into deeper turmoil. Already, the Houthis who control the north and center of the country and the government running the south use different currency notes with different exchange rates. They also run rival central banks.
Yemen was already the Arab world’s poorest country before the war began. Punitive actions by each side against the other’s banks over the past week now threaten to undermine merchants’ ability to import food and basic commodities and to disrupt the transfer of remittances from Yemenis abroad, on which many families depend, said Edem Wosornu, director of operations and advocacy for the UN humanitarian coordination office known as OCHA.
Adding to the confusion, the bills have different exchange rates—riyals issued in Sanaa go for about 530 to the dollar, while those from Aden are around 1,800 to the dollar. When the deadline ran out last week, the central bank in Aden banned dealing with six banks headquartered in Sanaa, meaning currency exchange offices, money transfer agencies and banks in the south could no longer work with them.