Houthi banknote ban sparks anger from Yemenis

The decision has forced residents living under Houthi control to use black market exchanges

Workers count money at the Central Bank of Yemen in Aden, Yemen December 13, 2018. Picture taken December 13, 2018. REUTERS/Fawaz Salman
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Yemenis have reacted angrily to a Houthi rebel decision to ban the use of bank notes recently printed by the internationally-recognised government.

The Iran-backed rebel group is refusing to allow the use of any new currency printed by the country’s Central Bank in Aden for the last three years.

The Houthis gave those living under their control one month to exchange the new banknotes for old notes or swap their money for electronic riyal controlled by banks captured by the Houthis.

Residents and traders in Sanaa, an area controlled by the rebels, expressed their dismay at the decision, particularly given the dire economic situation in the country.

"We have no chance to live after the new decision. All the money I have is in the new banknotes which have become only worth the paper they are printed on," one frustrated resident told The National on condition of anonymity, fearing reprisals.

“I can’t go to the market with it, I can’t even get a ride on the minibus - everybody wants us to pay them with the old notes, how come?” he said.

A shopkeeper based in Sanaa said the policy is causing problems for retailers, who cannot buy goods to sell, or give change in the old currency.

“This decision is a disaster, we need to import supplies to our shops,” he said.

“All the money we have is from the newly printed banknotes, the old bank notes are not available in the market, they are too old.”

The Central Bank of Yemen in Aden warned local exchange companies of dealing with the Houthi decision, saying it considers the banknote ban illegal.

Those living under Houthi rule say the policy has created a strange black market system where people exchange banknotes less than three years old for older notes. But the exchange rate is poor - for one million Yemeni Riyal (Dh14,670) in new banknotes, one would only recieve 700,000 Yemeni riyal (Dh10,270) in old banknotes.

“We either change our money in the black markets or die from hunger, this is really frustrating “ the shopkeeper explained, describing the new policy as a “fatal blow” for his business.

“The last days’ sales in my market dramatically plunged to 50 per cent, because we are not able to accept new bank notes from customers,” he said.

The traders’ union in Sanaa is threatening to call a strike in the city in the coming days unless Houthi authorities freeze the new decision.

Yemeni Prime Minister Dr Maeen Abdulmalik said the Houthi decision was an aggression which threatened the sovereignty of Yemen.

Dr Abdulmalik accused the Houthi militias of depriving over 175,000 state employees residing in areas under their control of their salaries.

Economic experts said the Houthi decision risks worsening the deteriorating economy of the country and will negatively affect the lives of millions of the Yemenis.

"The Houthi decision paralysed the banking circulation because banks in Houthi controlled areas will not be able to find large amounts of the old bank notes to pump them to the market," Majid Al-Daeri, an economics journalist based in Aden told The National.

“Consequently, all the state employees who used to receive their salaries from the internationally-recognised government will not be able to receive their salaries anymore because the central bank in Aden deals with the new printed bank notes,” he said.

“All trade sectors will be negatively affected by the decision because all the traders in both the south and the north have been trading with the new bank notes for over two years “ Saleh Al Jafri, an economic analyst based in Aden said.

“The Houthis were trading these notes and suddenly they ban it. This is nonsense!” Mr. Al-Jafri said