CBY pumps overall amount of $ 471 into market, dollar continues climbing

YEMEN - The dollar’s exchange rate exceeded YR 200, reaching a rate of YR 204, despite the Central Bank’s efforts to put millions of dollars into circulation in the exchange market to fix the exchange rate, which has been deteriorating in an unprecedented way since the beginning of the year.

The money exchange stocks’ owners say that the dollar’s rate increased on Wednesday to YR 203.

The exchange owners expressed skepticism over the Central Bank of Yemen's (CBY) procedures—saying that they are not reassuring—and showed fears of the continuing shortfall in the protection of the riyal through a fixed clear fiscal policy.

Al-Jezeera exchange places said they sell the dollar at a rate of YR 203 and buy it at a YR 202 rate, however Al-Korimi exchange sells at YR 203 and buys at 201.50.

Yesterday, the CBY intervened for the third time in less than a fortnight to support the national currency against the dollar and other foreign currencies. The bank put 56 million dollars into circulation on Wednesday, raising the overall amount put into circulation in June to $471 million.

The financial expert Dr. Mohammed al-Maitami attributed the decrease in the currency rate to the recent financial panic among individuals and financial institutions, which has been triggered by the Central Bank's announcement of the Prohibition of issuing dollars to commercial banks, exempting the exchange institutions from the decision.

Another factor is realized in the declaration of the bank’s intention of a monthly intervention in the exchange rate market, adding to their slowdown in supplementing the   foreign currency for the settlement of their external obligations.

 Al-Maitami told al-Wasat that some economic sources think that the disturbances in the payment balance account, and in particular the capital, and the continued decline of the value of foreign exchange reserves in the CBY was the main reason behind the deterioration of the currency as a result of the worsening financial situation and the current local and global economic crisis.

He expected more demand for the dollar during the next two months due to advent of Ramadan and the Ied occasion, which will lead to the dollar reserve attrition and more monetary interventions.

An Islah party source said that the government fails to cure the economic situation, and that there is a determination to pursue the same policies that rely on oil revenues for a long time given the kind of government inaction in real reforms. According to the source, the government did not take any actions to reduce corruption.

The source expected two alternatives by the government: it may resort to using the money reserve, an action that will be catastrophic to the country, or it would print a new currency which will lead to price sky rocketing that increases poverty.

The source told al-Sahwa net that the Ryial collapse proves the failure of the continuation of the government’s use of government treasury bills, which have failed to absorb liquidity from the market and achieve monetary stability. He added that the policies that accompanied the implementation of the treasury bills policies led to a decline in investments and an economic decline.

 

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