Saving the Yemeni riyal is great, but the people need to be saved too

The $2 billion bailout granted by Saudi Arabia to Yemen's Central Bank has put a brake on the rapid decline of the Yemeni riyal. Though the value of the Yemeni currency has risen now before the dollar, little or nothing has changed tangibly in the lives of civilians who have been bearing the brunt of the military conflict and the economic hardship for three years. 

The Yemeni riyal has been losing value since the breakout of the war in 2015. However, over the past few months, the devaluation has accelerated at an unprecedented level. This condition has aggravated the misery of the people in the country, exposing millions to further famine.

While it appears the Yemeni riyal is being saved from the utter collapse by the oil rich neighbour, civilians in Yemen have not been able to avoid the pain of the skyrocketing prices of food commodities. The economic damage to the citizens has been already done, and propping up the riyal does not seem to alleviate the economic ordeal of citizens any time soon.

Today, the price of food commodities have increased or doubled amidst unpaid salaries, prevalent employment and dysfunctional infrastructure.

Today, the price of food commodities have increased or doubled amidst unpaid salaries, prevalent employment and dysfunctional infrastructure

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Food and money have been used as a weapon of war, a matter which has fuelled the conflict and worsened poverty among the people. Yemen's markets are awash with food goods, but they are out of reach for millions of people whose pockets are short of cash.

The ongoing chaos has given room to the manipulators to act as they want whether when it comes to the price of basic commodities or the exchange rate of the currency.

There exists a state of fragile monitoring on merchants and bankers coupled by the inadequate attention by the concerned authorities to the issues that impact upon the livelihoods of civilians in this war-torn country.

Saudi Arabia's quick response to save the Yemeni riyal

Saudi Arabia was fast to respond to a social media post by Yemen's Prime Minister Ahmed Obaid bin Dagher on Tuesday. He called for rescuing the Yemeni currency, urging an immediate action.

"Saving the Yemeni riyal is saving Yemenis from inevitable hunger," the prime minister wrote.

On Wednesday, the Saudi interior ministry said "King Salman bin Abdulaziz has issued a directive to transfer a $2 billion deposit to the central bank of Yemen, in continuation of the kingdom's support of the Yemeni people."

The response was not belated given that Saudi Arabia is a prime war player in Yemen, and it has been blamed for the humanitarian catastrophe the country has been witnessing.

The response was not belated given that Saudi Arabia is a prime war player in Yemen, and it has been blamed for the humanitarian catastrophe the country has been witnessing

Saudi Arabia has been leading a fierce war against Yemen's Houthis who have been seen to be allied to Iran, an arch regional rival of the kingdom. In March of 2015, the Saudi-led coalition commenced an aerial campaign, targeting the Houthis who rose to power after toppling the legitimate government of Yemen.

Hitherto, the war has not wound up while the humanitarian tragedies keep ballooning. Millions of Yemenis are crying out for assistance. Thousands have been killed and millions displaced. Treatable epidemics like cholera have claimed the lives of thousands.

The United Nations has lately said more than three-quarters of Yemenis are now in need of humanitarian aid, adding that 22.2 million people  are dependent on some form of assistance. This man-made catastrophe is set to exacerbate so long as the war rages on.

Over the past three years, Yemen's air, land sea ports have been under the control of the Saudi-led Arab coalition, and this has hindered the smooth flow of goods into the country which imports nearly 90 percent of its food commodities from abroad.

Fleeting or lasting solution?

The crisis in Yemen is multi-faceted and the war is complicated. This puts any short-term solution to the plight at risk. Though economists emphasise the Saudi bailout is a significant move to stave off further deterioration of Yemen’s economy, it remains unguaranteed that the economic situation and living conditions of people will largely improve overnight.

Mustafa Nasr, the head of the Chairman of studies & Economic media Centre (SEMC ), said the Saudi deposit was "an important step to deal with the magnitude of the currency collapse."

"Notwithstanding it [the bailout] is important, it necessitates serious work by the Central Bank and technical and financial assistance by brotherly and friendly countries in the region and the world," Nasr added.

According to Nasr, the bailout has strengthened confidence in the Yemeni currency, leading to improving the value of the Yemeni riyal. However, he warned this improvement will not last unless practical measures are taken in reality.

For this move to be viable, the economist has made suggestions. He said gas and oil exportation should resume. In addition, the local resources, donations and funds should be mobilized. On top of that, trust in the banking sector should be restored, Nasr said.

In 2015, the war broke out in Yemen when $1 was equal to YR250. Today, the $1 is equivalent to Y450. The riyal devaluation has been on the rise over the last three years, and the people's ordeal has been swelling uncontrollably. Now, Yemen requires both its currency and its people to be saved simultaneously.

Khalid Al-Karimi is a freelance reporter and translator. He is a staff member of the Sanaa-based Yemeni Media Center and previously worked as a full-time editor and reporter for the Yemen Times newspaper.