A Saudi source told Reuters that Saudi Arabia will deposit $1 billion in Yemen’s central bank in Aden on Tuesday, as the government there struggles with a weak currency and high fuel and commodity prices.
An official announcement is expected later Tuesday at the conclusion of a major humanitarian conference hosted by the kingdom’s King Salman Humanitarian Aid and Relief Center in Riyadh, according to the source.
Riyadh leads a military coalition in Yemen that has been fighting the Iran-aligned Houthis since 2015, when the movement overthrew the Saudi-backed government in Sanaa.
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The internationally recognised government in the south had seen its public finances deteriorate after the Houthi movement launched a series of attacks on terminals there, hampering oil exports, a key revenue source.
The Arab Monetary Fund agreed to lend $1 billion to Yemen’s economic reform programme in November.
Tens of thousands of people have been killed in the conflict, and 80% of the population is now reliant on aid, with millions going hungry.
Due to dollar shortages, the Aden-based government raised the US dollar exchange rate used to calculate customs duties on non-essential goods by 50% last month, sending prices to all-time highs.
According to traders, the rial was trading at 1,225 to the US dollar on the black market in Aden on Tuesday.
Yemen has two rival central banks. To finance the deficit, the government has resorted to printing money, but in Houthi-held areas where new notes are prohibited, the rate is around 600 rials to the dollar.
Aziz El Yaakoubi contributed reporting, and Mohammed Alghobari in Aden provided additional reporting. William Maclean and Ed Osmond edited the piece.
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