New Houthi-minted currency increases economic divide in Yemen.
Yemen’s Houthi militia has issued a new 100-riyal coin for the first time in nearly a decade, a move that sparked the ire of the Aden-based central bank.
Hashem Ismael, the governor of the Houthi-controlled central bank, revealed during a news conference in Sanaa on Sunday that they had produced a new 100-riyal coin, which will go into circulation on Sunday and replace the damaged 100-riyal banknote.
The Houthi official did not provide many details as to how they minted the new currency but did state that it was coined in accordance with the “latest international specifications and standards” and that they planned to introduce coin currencies in lesser quantity.
In Aden, the central bank described the Houthi move as “illegal” and “escalatory” and urged residents and financial institutions in Houthi-controlled areas to avoid using the new “fake” currency.
“The militia will be held accountable for this irresponsible escalation, as well as the resulting complexity and uncertainty in people’s transactions with financial and banking institutions,” the central bank in Aden said in its statement.
The Houthi central bank allayed concerns about the potential devolution of the Yemeni riyal in certain areas or the legal grounds for issuing the new coin currency by stating that the new currency would replace existing banknotes in the market that are in short supply and that the new coin was issued under the bank’s regulations.
Yemen is separated into two economic areas: one in the southern city of Aden, held by the internationally recognized Yemeni government, and the other in Sanaa, controlled by Iran-backed Houthis.
The Yemeni government moved the central bank’s headquarters from Sanaa to Aden in 2016 after accusing the Houthis of stealing the bank’s funds and using them to support their war effort.
The Houthis replied by ceasing to pay public employees in regions under their control, as well as prohibiting residents from using Aden-issued banknotes.
The Houthis also began an economic war against the Yemeni government, preventing traders from importing commodities through Yemeni government-controlled ports and attacking oil terminals in Hadramout and Shabwa.
In the Houthi territory, the Yemeni riyal is traded at 533 riyals per dollar, whereas in government-controlled territories, it is traded at 1,661 riyals per dollar.
When the Houthis seized power by force in late 2014, the riyal traded at 215 per dollar.
Mustafa Nasr, director of the Studies and Economic Media Center, said that launching the new coin currency will deepen the economic divide and worsen the economic war between the Yemeni government and the Houthis.
He added that the Houthis would issue further new currencies.
“This measure serves as a test of the pulse to continue producing further monetary denominations of currency as needed, as well as establishing an independent economy,” Nasr said.
He argues that the impact of the Houthi move will be determined by responses from Aden’s central bank and international monetary agencies, as well as the volume of the new coin money in circulation.
“Despite the higher expense of minting coins, the Houthi group prefers them because they are easier to mint and obtain.”
Meanwhile, Yemen’s government and human rights advocates have accused the Houthis of attempting to cover up the deaths of people in the central province of Radda after blowing up their homes.
On March 19, the Houthis detonated a house in Radaa, Al-Bayda, killing at least nine civilians from one family and injuring dozens more.
The Houthis agreed to reconstruct the damaged houses, recompense the families of the deceased, and prosecute those responsible for the deaths.
Nasser Ali Al-Sanae, a Yemeni activist from Radaa who fled Houthi repression and now lives in Marib city, says that the Houthis forced Ibrahim Al-Raimi, the family’s last living member, to sign a document to bury his family and that the Houthis have not tried any of the soldiers who blew up the houses.
The Houthis said they had questioned the soldiers and compensated the affected families.