Yemen is facing a dire situation as Houthi rebels and the internationally recognized government battle for control of the country's banks, exacerbating the already fragile economy after years of conflict. The rivalry has plunged Yemen's financial system into deeper turmoil, with the Houthis and the government operating separate central banks and using different currency notes with varying exchange rates.
This escalating money divide is devaluing Yemen's currency, the riyal, leading to increased prices for essential goods like clothing and meat, particularly ahead of the Eid al-Adha holiday. Yemenis in Houthi-controlled areas have been unable to access their bank savings, sparking protests and further economic distress.
Yemen, the Arab world's poorest country even before the war, has been grappling with a civil war since 2015 when Houthi rebels seized control of the capital, Sanaa. The conflict has now spilled over into the financial sector, with each side taking punitive actions against the other's banks, jeopardizing food imports, remittances, and overall economic stability.
The internationally recognized government relocated the central bank to Aden in 2016, issuing new banknotes to replace worn-out riyals. In response, the Houthi authorities established their own central bank in Sanaa and introduced their currency, leading to further economic fragmentation.
The recent ban on dealing with banks headquartered in rival territories has worsened the situation, with both sides facing cash shortages and potential international financial isolation. The U.S. designation of the Houthis as a terror group has added another layer of complexity, raising concerns among global banks about engaging with Houthi-controlled financial institutions.
As Yemen's economy teeters on the brink, ordinary citizens are bearing the brunt of the crisis. Depositors are struggling to access their funds, facing restrictions and uncertainty about the safety of their savings. The ongoing conflict over control of the banks threatens to deepen poverty, exacerbate food insecurity, and increase reliance on humanitarian aid, painting a bleak picture for Yemen's future.
