Yemeni currency falls to lowest level against USD

The Yemeni currency, the Rial, fell to its lowest level ever against the U.S. dollar as the government continues to accuse Houthi militants of wasting the country's foreign reserves on their war.

The exchange rate suddenly rose from a Houthi-fixed rate of 1 U.S. dollar against 250 Yemeni Rials (YR) to 320YR.

Before the 2014 Houthi takeover, 1 dollar equalled 215YR.

This alarming development comes as the four-week peace talks in Kuwait still haven't reached a solution to end the war which landed the country's economy close to total collapse.

Economists blame the economic disaster on Houthi rebels, the internationally recognized government as well as the Saudi-led coalition member countries.

Mustafa Nasr, Chief Executive Officer (CEO) of the Studies and Economic Media Center said Houthis must be held responsible for the economic turmoil since they run the capital city of Sanaa.

"This group has spent foreign currency reserves and was involved in practices which led to the suspension of foreign aid and opened the door for fuel imports without foreign currency cover," said Nasr.

He said foreign currency reserves have dropped from 4.7 billion dollars before the Houthi takeover to the current 1.3 billion dollars.

"Moreover, the black market has flourished under Houthi rule. The unofficial business system established forced billions of investors to flee the country," he added.

When it comes to the internationally-backed government, he said it must share responsibility for increasing the economic woes.

"The government with its international community support agreed with Houthi rebels to run the Central Bank. However, it failed to oversee the Bank's performance," he said.

"In addition, members of the Saudi-led coalition share part of the responsibility since they did nothing, such as transferring sufficient amounts of US dollars to Yemeni banks to alleviate the dollar shortage," Nasr elaborated.

Nasr called for an immediate intervention to save the Yemeni currency and prevent an impending economic collapse.

He suggested that the Saudi-led coalition of 10 countries and in particular the Gulf Cooperation Council (GCC) must provide financial support to Yemen's Central Bank or open credit lines for the Bank with foreign banks.

"Most importantly, the alarming situation requires an urgent political solution. Yemen needs to reclaim public institutions from militias and the international community must help it control and stabilize its financial system," he said.

The Saudi-led military intervention launched in March 2015 with the objective of reinstating president Abdu Rabbuh Mansour Hadi escalated the Yemeni conflict.

However, the result was that all foreign investments including oil and gas projects came to a halt mostly due to the blockade on all Yemeni sea, land and air routes.

Yemen has not earned any income and has been suffering from shortage of all supplies since then, as due to the blockade, all exports and imports have stopped.

Yemen largely depends on the income from the oil and gas sector which contributes over 70 percent to its budget.

Also, official reports by Sanaa authorities estimated that the agricultural, industrial and trade sectors have been negatively affected by around 80 to 90 percent.

The report stated that supply shortages, including fuel, forced the closure of most of the country's businesses.

Furthermore, the civil war and Saudi-led airstrikes exacerbated the situation as several businesses in addition to infrastructure came under direct attack from all sides of the conflict.

Research centers said the budget deficit increased last year to 15.4 percent and Yemen's debt increased to 25.9 billion dollars from 22.1 billion dollars in 2014.

The United Nations (UN) recently warned that millions of Yemenis are a step away from famine.

It called for an immediate 1.8 billion dollars in aid to Yemen.

According to UN data, 82 percent of Yemenis, or 21 million, need basic aid, and 14.4 million are experiencing food instability "including 7.6 percent who are severely undernourished," and 14 million others lack access to healthcare services, whilst around 19 million lack access to safe water and sanitation.

Children constitute around half of Yemen's population.

The war has also displaced around 2.76 million Yemenis according to UN figures.

In addition, around 600 health facilities were forced to shut down owing to infrastructural damages, shortage of medical supplies or insufficient numbers of healthcare employees, including nearly 220 facilities treating acute malnutrition, said the UN.

Over 1.8 million children have not attended school since mid- March 2015, bringing the total school-age population presently out of school to over 3.4 million children, it added.

Yemen is undergoing one of the severest humanitarian crises globally, according to senior officials from the Office for the Coordination of Humanitarian Affairs (OCHA) and the World Health Organization (WHO) in their joint statement on Monday after visiting the country. Endit