Yemen's Currency Stabilisation Triggers Severe Cash Shortage, Limiting Daily Conversions to 50 Saudi Riyals

**TL;DR** Yemen's currency stabilization efforts have paradoxically led to a severe cash shortage. Daily foreign currency conversions face strict limits, hindering economic activity.

Yemen's national currency, the riyal, has significantly improved its exchange rate against the US dollar. Several months ago, the riyal traded at approximately 2,900 per US dollar. Current rates show a marked strengthening to about 1,500 riyals per dollar.

This stabilization follows measures by the central bank in Aden, including shutting down unauthorized exchange firms and centralizing remittances. The intent was to curb currency speculation and manage inflation within a conflict-affected economy.

Despite this currency improvement, a severe cash liquidity crisis now impacts daily transactions. Banks and exchange firms impose tight restrictions on foreign currency conversions. Individuals can convert a maximum of 50 Saudi riyals per person per day.

Mohammed Omer, a local grocery shop owner, illustrates this challenge; he reported struggling to convert foreign currency, with firms refusing to exchange more than 50 Saudi riyals at a time. This limit complicates access to funds for many Yemenis.

The shortage of physical Yemeni riyals in the market paralyzes businesses and daily life. Even with savings in foreign currencies like US dollars or Saudi riyals, individuals struggle to access local cash.

This forces many to use informal channels, often at less favorable exchange rates, further distorting market mechanisms. The central bank in Aden acknowledges the cash shortage, indicating ongoing efforts to address the issue. The situation highlights the challenges of implementing monetary policy in a conflict-affected economy.

Observers will monitor the central bank's next steps to inject liquidity and balance currency stability with cash availability.