Yemen central bank nearly doubles interest rate to halt riyal plunge

Yemen’s currency has halved in value against the US dollar since the start of a civil war in 2014. (File/AFP)
Updated 19 September 2018
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Yemen central bank nearly doubles interest rate to halt riyal plunge

  • Yemen’s currency has halved in value against the US dollar since the start of a civil war in 2014
  • The United Nations says more than 8 millions Yemenis are at risk of famine

ADEN: Yemen’s central bank, based in territory controlled by its exiled government, nearly doubled its interest rate on Wednesday in an effort to stabilise the riyal after violent demonstrations against a plunging currency.

State news agency Saba said the rate on certificates of deposit had been hiked to 27 percent. An official at the bank said the previous rate had been 15 percent for the past four years.

Yemen’s currency has halved in value against the US dollar since the start of a civil war in 2014, when the capital was captured by the Iran-aligned Houthi movement and the government fled.

Most Yemenis now live in Houthi-controlled territory, while the government of exiled President Abd-Rabbu Mansour al-Hadi controls the south, backed by a Saudi-led coalition of Arab troops.

Saba said the central bank also raised the interest rate on government bonds to 17 percent. It did not say what the previous rate was.

The effect of the rate decision is difficult to forecast in the Arabian peninsula’s poorest country, where inflation has hit record highs and many traders prefer a safer Saudi riyal.

The United Nations says more than 8 millions Yemenis are at risk of famine, requiring the world’s most urgent relief effort.

The plunge in the currency and soaring inflation sparked violent demonstrations in the government-held south earlier this month.

The banking system still functions, delivering some government salaries, and is used for transfers of funds from Yemenis living abroad.

Wednesday’s statement said the bank will tighten foreign exchange rules and Yemenis will not be allowed to take more than 10,000 US dollars out of the country without approval from the central bank.

“The central bank also reiterates its commitment to help commercial banks by transferring hard currencies to their foreign accounts,” the statement added.

Last year, the government floated the riyal, instructing banks to use the market rate for the riyal instead of a fixed rate.

On Wednesday, the currency was changing hands at around 610 riyals to the dollar on the black market in the southern port of Aden, base of Hadi’s exiled government, while the official rate was announced at just 490 riyals, according to traders. Black market rates are similar in Houthi-held territory.

Hadi’s government moved the central bank from the capital Sanaa to Aden in 2016, a move that put the bank in the crossfire of Yemen’s war. 


MPs, parties welcome Lebanon’s decision to ban Hezbollah’s military wing

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MPs, parties welcome Lebanon’s decision to ban Hezbollah’s military wing

  • Lebanese judiciary issues arrest warrants to pursue those who fired rockets at Haifa
  • Bilal Al-Houshaymi: It (Lebanon) is either a fully sovereign state with a single decision-making authority, or it will continue its downward slide into greater danger and collapse

BEIRUT: Lebanon’s Cabinet decisions were described by political parties and parliamentarians as the boldest measures taken against Hezbollah to date, with ministers from the Amal Movement, the group’s key ally, joining in a show of government solidarity.

In an unprecedented move, Lebanon’s Cabinet on Monday declared Hezbollah’s military activities illegal and demanded the immediate handover of its weapons, following Israeli strikes that killed more than 40 people and wounded dozens across Beirut’s southern suburbs, southern Lebanon and the Bekaa Valley.

The Israeli strikes came after rockets and drones were fired from Lebanese territory toward northern Israel — an assault Hezbollah said was carried out in retaliation for the killing of Iran’s Supreme Leader Ayatollah Ali Khamenei. Among those killed were several Hezbollah officials.

Independent MP Ibrahim Mneimneh affirmed his support for the government’s decisions “at this sensitive stage” as he said they consolidate the sovereignty of the state and the confinement of security and military decision-making to its legitimate institutions.

“The protection of Lebanon requires the firm application of the law, without making any exceptions, and providing support for the army and security forces in carrying out their duties in order to safeguard stability and civil peace,” he added.

Beqaa MP Bilal Al-Houshaymi said Lebanon cannot withstand new experiments or further adventures. “It is either a fully sovereign state with a single decision-making authority, or it will continue its downward slide into greater danger and collapse.”

Lebanese Forces party leader Samir Geagea said in a statement that the cabinet had taken an additional step toward the establishment of a functioning state.

“The ball is now in the court of the Lebanese Armed Forces, the Internal Security Forces, General Security, State Security and the competent judicial authorities. It is their chance to begin implementing the government’s decision seriously and decisively as of this moment,” he added.

The party’s two ministers remained alone in their defense of what they called the “resistance.” This stance was articulated by Health Minister Rakan Nassereddine, whom Hezbollah named to represent it in the government, as he said after the session that “no one holds their resistance accountable as we have held ours accountable.” He questioned whether “the Israelis can be trusted.”

Lebanese President Joseph Aoun held those who launched the rockets responsible for their actions, noting that the Lebanese people should not bear responsibility “for a reckless operation.”

Aoun said Hezbollah’s morning strike was “not a defense of Lebanon nor a protection of the Lebanese; it is not acceptable in any way whatsoever, and it gives Israel a pretext to destroy what is left.”

The cabinet asked the Lebanese Army Command to immediately and firmly begin implementing the plan to restrict weapons north of the Litani River, announcing that Lebanon is ready to resume negotiations with Israel.

The cabinet decisions, read out by Prime Minister Nawaf Salam in an address, announced that the government had formally rejected any military or security operations carried out from Lebanese territory outside the authority of the state, reaffirming that the decision of war and peace rests solely with the government.

The measures include an immediate ban on all Hezbollah military and security activities deemed unlawful, a requirement that the group hand over its weapons to the state, and a restriction of its role to political activity within constitutional and legal frameworks — a step aimed at ensuring the monopoly of arms remains exclusively with the state and reinforcing full sovereignty over Lebanese territory.

Salam said that the government does not seek confrontation with Hezbollah. “But we cannot in any way accept the launching of rockets from Lebanon nor the threat of civil war.”

In parallel with the political move, the Lebanese judiciary moved to pursue those who fired rockets at Haifa from Lebanese territory. The military judiciary issued warrants to arrest all those responsible for launching rockets at the Israeli city.

Government Commissioner to the Military Court Claude Ghanem requested that the security agencies identify those who took part in directing the rockets, arrest them immediately and refer them to the military public prosecution.

A judicial source confirmed that the security agencies verified that the rocket-launching operation took place from an area of valleys and forests located north of the Litani River.

A statement bearing the signature of Hezbollah’s Military Media had been issued at dawn claiming responsibility for the operation of bombarding the Mishmar site south of the city of Haifa with a salvo of rockets and drones, as “revenge for the blood of the Iranian Supreme Leader Ali Khamenei.”

While Hezbollah has not issued any official statement tallying its human losses as a result of direct Israeli strikes, Lebanese and Israeli field reports cited the assassination of Mohammad Raad, head of Hezbollah’s parliamentary bloc, who in recent months had coordinated between the state and the party on the issue of restricting weapons; Sheikh Ali Daamoush, the head of Hezbollah’s Executive Council; and Hussein Moukalled, the head of Hezbollah’s intelligence services in the southern suburb.

The reports also mentioned the killing of Mohammad Rida Fadlallah, brother of the late scholar Sayyed Mohammad Hussein Fadlallah, along with his wife; and Sheikh Abdullah Shaito, a Ja‘fari Sharia judge, with his son and daughter.

Amid the strikes, citizens evacuated Beirut’s southern suburb, more than 53 southern villages and dozens of villages in the Beqaa region.

Many fled at night, remaining in their cars or along the roadsides in Beirut, amid successive warnings issued by the Israeli army urging civilians to leave their villages and homes ahead of strikes on Hezbollah targets, according to its claims.

As hotels reached full capacity, many turned to furnished apartments. Although the state opened a number of public schools to shelter the displaced, the hastily opened and prepared facilities were insufficient to accommodate tens of thousands of people.

Meanwhile, a military source suggested that the evacuation of the villages could be a prelude to a ground invasion.

Israel announced the mobilization of about 100,000 reservists along the border with Lebanon in preparation for expanding the war. Israeli army spokesperson Avichay Adraee posted on social media that “all options are on the table,” adding that “Hezbollah chose to launch this campaign, and will pay a heavy price for it.”

Israeli Chief of Staff Eyal Zamir warned of “many days of fighting ahead,” while Israeli Defense Minister Israel Katz said that “Hezbollah chief Naim Qassem is now a ‘target for elimination,’ and Hezbollah will pay a heavy price for launching missiles toward Israel.”