This report provides an in-depth analysis of the currency rate movements for the Yemeni rial (YER) against major foreign currencies, specifically the US dollar (USD) and the Saudi riyal (SAR), throughout May 2024. The data presented includes daily exchange rates in two key cities, Aden and Sana’a, which exhibit significant regional disparities.
Key Observations
General Trends
- The Yemeni rial experienced a noticeable decline in value against both the US dollar and the Saudi riyal over the course of May 2024.
- There is a significant difference in exchange rates between Aden and Sana’a, reflecting economic imbalances between these regions.
- Exchange rates showed considerable volatility, especially towards the end of the month, indicating instability and uncertainty in the market.
Exchange Rates in Aden
- The buying rate for USD started at 1686 YER and ended at 1763 YER, while the selling rate increased from 1699 YER to 1771 YER.
- The buying rate for SAR increased from 445 YER to 466.5 YER, and the selling rate rose from 447 YER to 467.5 YER.
Exchange Rates in Sana’a
- Exchange rate for the US Dollar in Sana’a remained relatively stable, with slight fluctuations. The buying rate hovered around 530 YER, and the selling rate was constant at 533-534 YER.
- The SAR rate in Sana’a remained mostly stable at around 140 YER for buying and 140.3 YER for selling.
Detailed Analysis
Aden: Rising Exchange Rates and Increased Volatility
Throughout May, Aden experienced a significant increase in exchange rates for both the USD and SAR:
- USD Trends: The USD buying rate rose from 1686 YER on May 1 to 1763 YER on May 31, marking a substantial increase of approximately 4.6%. The selling rate followed a similar trend, increasing from 1699 YER to 1771 YER.
- SAR Trends: The SAR buying rate saw an increase from 445 YER to 466.5 YER, representing an approximate 4.8% rise. The selling rate went from 447 YER to 467.5 YER.
Daily Fluctuations
The exchange rate for the USD showed fluctuations between 1686 and 1763 YER for buying and between 1699 and 1771 YER for selling. A notable spike occurred towards the end of May, reflecting heightened market uncertainty and increased demand for foreign currencies. The SAR rate followed a similar pattern with a gradual increase and some daily variability, suggesting regional economic pressures.
Sana’a: Relative Stability Amidst Regional Disparities
In contrast to Aden, Sana’a displayed relatively stable exchange rates throughout May, indicating a controlled market environment:
- USD Trends: The buying rate for USD in Sana’a remained consistently at 530 YER, with minimal fluctuation. The selling rate varied slightly between 532 and 534 YER.
- SAR Trends: The SAR rate remained at approximately 140 YER for buying and 140.3 YER for selling, indicating stable economic conditions despite the broader national turmoil.
Regional Disparities
The disparity between exchange rates in Aden and Sana’a highlights regional economic differences. For instance, the USD buying rate in Aden exceeded the rate in Sana’a by over 1200 YER, reflecting higher demand and inflationary pressures in Aden.
This regional gap suggests a need for economic policy interventions to balance the economic disparities and stabilize the national currency.
Factors Influencing Currency Movements
Several factors contributed to the currency movements observed in May 2024:
Economic Instability and Inflation
- The continued economic downturn in Yemen, exacerbated by political instability and conflict, has led to hyperinflation and a steep decline in the value of the YER.
- Increased demand for foreign currencies, particularly USD and SAR, to facilitate imports and conduct international transactions, has further devalued the YER.
Policy Measures and Market Interventions
Despite the central bank’s efforts to stabilize the currency through measures such as currency auctions, the impact has been limited. The reported auctions in May failed to prevent the YER’s depreciation, indicating inadequate foreign reserves and market intervention capacity.
Supply Chain Disruptions
Ongoing conflict and economic blockade have disrupted supply chains, increasing the cost of imports and fueling further demand for foreign currencies. These disruptions are more pronounced in Aden, a key port city, leading to higher exchange rates compared to Sana’a.
Conclusion
May 2024 saw significant depreciation of the Yemeni rial against major foreign currencies, with marked regional disparities between Aden and Sana’a. Addressing these challenges requires comprehensive economic reforms, enhanced policy measures, and international cooperation to stabilize the currency and promote economic resilience in Yemen.
