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Abu Dhabi, UAESunday 21 October 2018

Saudi Arabia to release $200 million grant to support Yemen economy

The currency of the war torn country has plunged sharply as economy deteriorates 

A Yemeni man holds Yemeni currency banknotes amid a continuous collapse of the rial. EPA 
A Yemeni man holds Yemeni currency banknotes amid a continuous collapse of the rial. EPA 

Saudi Arabia's King Salman granted the Central Bank of Yemen $200 million (Dh734m) to support the country’s economy and boost its battered currency, state-run SPA reported.

“The kingdom of Saudi Arabia affirms its continued support for the Yemeni government to restore Yemen's security and stability and enable it to carry out its duties, which will benefit the Yemeni citizens,” the kingdom’s official news agency said.

The grant of $200m is in addition to $3bn, Saudi Arabia has already deposited with central bank in Yemen and will “contribute to the alleviation of the economic burden on the brotherly Yemeni people”.

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Saudi Arabia is leading an Arab military coalition that is supporting Yemen's internationally recognised government against Iran-backed Houthi rebels who seized the capital in 2014. The three year war has crippled the economy, displaced millions and destroyed critical infrastructure in what was already the poorest Arab country.

The Yemeni rial has dropped sharply against the US dollar as a result of the war and Houthis looting of the central bank before President Abdrabu Mansur Hadi moved it to Aden in 2016. The currency traded at around 215 rials to the dollar before the war but had fallen to almost four times that rate, trading as high as 800 to the greenback in the black market.

Yemen's central bank nearly doubled its interest rate last month in a bid to stabilise its plunging currency. The rate on certificates of deposit was hiked to 27 per cent from 15 per cent for the past four years, according to Reuters.

The rial rose by nearly 10 per cent against the dollar after Saudi Arabia transferred $2bn in March to shore up the country’s economy.