Yemen central bank shuts firms linked to currency crash

Customers are reflected in a window as a cashier works at the central bank of Yemen’s UN-recognized government in Aden, Yemen. (AP/File)
Short Url
Updated 02 December 2020

Yemen central bank shuts firms linked to currency crash

  • The banned firms were established over the last five years when Yemen’s banking system fell apart amid the country’s civil war

AL-MUKALLA: Yemen’s central bank has closed 30 private exchange firms for violating currency speculation rules after the Yemeni riyal hit a record low against the US dollar this week.

In a letter sent on Tuesday to local exchange firms and government and private banks, the central bank asked local monetary firms to sever ties with the blacklisted firms and freeze their accounts. The letter accused the firms of failing to comply with central bank regulations and taking part in currency speculation that led to the decline of the riyal.

The banned firms were established over the last five years when Yemen’s banking system fell apart amid the country’s civil war.

In a bid to curb currency speculation and money laundering, the Aden-based central bank has banned an informal remittance system between local exchange firms known as Hawala, and replaced it with a formal electronic network under its supervision. It also closed many unauthorized exchange firms and provided locals goods and fuel traders with hard currency.

The measures had no effect on the market as the Yemeni riyal plunged to 880 against the dollar this week, reaching historical new lows and breaking a previous 855 record last month. The dollar was traded at 682 in January this year, falling from 215 in January 2015.

Local currency traders told Arab News that there is surging demand for the US dollar and Saudi riyal from local traders, which contributed to the riyal crash.

“When the dollar and the Saudi riyal have been scarce in the market recently, a local trader came to us and wanted to buy 1 million Saudi riyals at any cost,” an anonymous trader told Arab News, adding that many currency traders are cashing in on growing demand for the dollar to sell at inflated prices.

Subhi Baghafar, a spokesperson for the Moneychangers Association in Aden, said that the association stands by the central bank’s punitive measures against unauthorized exchange firms and those who take part in currency speculation, adding that the internationally recognized government should “bring the banking system under its control.”

Baghafar said: “We support any strict measures against violators of the central bank’s regulations and the system of the moneychanging profession, whether they are commercial banks, companies, money-changing institutions, individuals or businessmen.”

Economists blamed the Yemeni government for failing to curb the currency’s fall and the Iran-backed Houthis for banning the use of new banknotes printed by the central bank.

Mustafa Nasr, director of the Economic Media Center, said that the Yemeni government should “act quickly” to rein in the currency crash by restricting new banknotes, imposing tough punishments on currency speculators and creating a supply and demand balance for the dollar.

“The continuing fall of the riyal reflects the failure of not only the central bank, but the government, the presidency and all of the internationally recognized government’s institutions and risks causing destructive impacts on the currency and people’s life,” Nasr said.

The rapid devaluation increased the prices of some basic commodities by about 10 percent, local traders and small grocers said.

“This egg costs 100 riyals now, rising from 80 last week,” Hassan, who runs a small grocery in the city of Al-Mukalla, told Arab News.

The Sanaa Center for Strategic Studies demanded in a report on Nov. 27 that the international community pressure Yemen’s government and the Houthis to end fighting over control of the country’s banking system.

“The international community must elevate the importance of the economy in its Yemen policy immediately, starting with increasing political pressure on the Houthis and the government to halt the escalation and battle for control over Yemeni banks and money exchange outlets,” the report said.

“While the military conflict has claimed many lives and caused significant destruction to the country, it is the economic warfare that has a wider, and arguably more devastating, impact on the population and the country as a whole,” it added.

Saudi Arabia offers Europe ‘green’ hydrogen by pipeline

Updated 3 min 48 sec ago

Saudi Arabia offers Europe ‘green’ hydrogen by pipeline

  • Hydrogen is regarded by many experts as the clean energy of the future
  • The need to fight global emissions is key to the “circular carbon economy” championed by Saudi Arabia as a way to achieve climate change goals

DUBAI: Saudi Arabia is offering to transport “green” hydrogen by pipeline to Europe in the next stage of the Kingdom’s strategy to combat climate change.

“If Europe would like to buy more hydrogen, Saudi green hydrogen, we would be more than happy, and even, if the economics allow for it, even piping it all the way to somewhere in Europe,” Saudi Energy Minister Prince Abdul Aziz bin Salman said.

He also hinted at major developments to come in solar energy production. “I believe in the next month or so we’ll dazzle the world with how cheaply we can get our solar electricity,” he said.

Prince Abdul Aziz was speaking at a virtual meeting of the International Energy Forum and the European Union hosted in Riyadh, at which he added detail to the Kingdom’s strategy to control harmful greenhouse gas emissions.



Hydrogen is regarded by many experts as the clean energy of the future. Green hydrogen is produced using solar energy, and is a major feature of the energy equation at the planned NEOM megacity. In another form, “blue ammonia” is a byproduct of the oil refining process that Saudi Aramco has already produced and exported to Japan.

The need to fight global emissions is key to the “circular carbon economy” championed by Saudi Arabia as a way to achieve climate change goals, and was endorsed by G20 leaders last year under the Saudi presidency.

Prince Abdul Aziz appealed for “flexibility” by other countries in the debate over how best to mitigate climate change.



“The goal is to be flexible and mindful of the participants and their priorities,” he said.

Some countries, especially in Europe, have said they would like to move away more quickly from hydrocarbon fuels. Saudi Arabia, the world’s biggest oil exporter, believes this is the wrong approach.

To address climate change, Prince Abdul Aziz said, “you need to bring everybody on board and you need to be mindful of their priorities and you need to be mindful of how much (energy resources] they are endowed with.

“But I can guarantee you that we’re opening hands, hearts and minds to work with everybody and bring solutions to move forward and work with these ambitions, but with a difference — we are not bragging about it, not talking about it, we are executing these things and providing people with examples.

“Trust us, but more important, collaborate with us in universal solutions.”

UK to allocate $17bn for new infrastructure bank

Updated 27 February 2021

UK to allocate $17bn for new infrastructure bank

  • Sunak to use budget to expand apprenticeships and extra funds for traineeships

LONDON: Britain is to launch a new infrastructure bank with £12 billion ($17 billion) in capital and £10 billion in government guarantees, the treasury said on Saturday, aimed at supporting the economy.

British Finance Minister Rishi Sunak, is expected to announce the initial funding at Wednesday’s budget and the bank will launch in spring, the ministry said.

“Britain’s businesses and the Great British public deserve world-class infrastructure and that is exactly what this new bank will help us deliver for them,” Sunak was quoted as saying.

The bank is set to finance private sector projects in the green economy, focusing on areas such as carbon capture and renewable energy.

It will also provide loans to local authorities at low interest rates to support “complex infrastructure projects.”

The Finance Ministry said the bank would unlock billions more in private finance to support a £40 billion infrastructure investment to “fire up the economy” and help reach commitments on net zero emissions and reducing regional deprivation.

The announcement comes as Britain’s economy has been hit hard by pandemic lockdowns.

Analysts expect unemployment to surge when the UK government’s furlough scheme paying the bulk of wages for millions in the private sector ends — as currently planned — at the end of April.

Sunak last week hinted he would announce further employment support in the coming months.

He first announced the planned bank in November last year, saying its headquarters would be in northern England rather than in the financial hub of London.


The minister will also announce more funding for apprenticeships in England.

Employers taking part in the Apprenticeship Initiative Scheme will from April 1 receive £3,000 for each apprentice hired, regardless of age — an increase on current grants of between £1,500 and £2,000 depending on age.

The scheme will be extended by six months until the end of September, the Finance Ministry said.

Sunak will also announce an extra £126 million for traineeships for up to 43,000 placements.

‘Enormous strains’

Sunak will use the budget next week to level with the public over the “enormous strains” in the country’s finances, warning that a bill will have to be paid after further coronavirus support, according to an interview with the Financial Times.

Sunak told the newspaper there was an immediate need to spend more to protect jobs as the UK emerged from COVID-19, but warned that Britain’s finances were now “exposed.”

UK exposure to a rise of 1 percentage point across all interest rates was £25 billion a year to the government’s cost of servicing its debt, Sunak told FT.

Additionally, the government will also announce a new £100 million task force to crackdown on COVID-19 fraudsters exploiting government support schemes, it said.

S. Africa proposes new rules to boost economy

Updated 27 February 2021

S. Africa proposes new rules to boost economy

  • Africa’s most industrialized nation — the hardest-hit by the coronavirus disease (COVID-19) pandemic on the continent — has put public works in sectors

JOHANNESBURG: South Africa’s National Treasury is proposing changing rules governing pension funds to encourage investment in infrastructure projects.

Africa’s most industrialized nation — the hardest-hit by the coronavirus disease (COVID-19) pandemic on the continent — has put public works in sectors such as transport, energy and water at the heart of its economic recovery plans.

The treasury is proposing changes to Regulation 28 of the Pension Funds Act in draft amendments published for public comment on Friday. This rule sets the maximum percentage of a fund’s assets that can be invested in different asset classes and is aimed to shield savers from over-concentrated investments.

The proposed amendments do not introduce infrastructure as a new asset class alongside existing ones like equities, debt instruments and property but allow for infrastructure investments to be recognized within those asset classes.

They also say overall investment in infrastructure across all asset categories may not exceed 45 percent of domestic exposure and an additional 10 percent for the rest of Africa.

The changes should make it easier for retirement funds to invest in infrastructure and allow for better measurement of investment in projects, the Treasury said in a statement.

The changes are “informed by a number of calls for increased investment in infrastructure given the current low economic growth climate,” it said, stressing that the decision to invest in any asset class remained up to the board of trustees of each fund.

The public can comment on the amendments until late March.

G20 vows multilateral approach to tackle crises

Updated 28 February 2021

G20 vows multilateral approach to tackle crises

  • Finance chiefs agree to avoid premature withdrawal of fiscal support

ROME/BRUSSELS: The world’s financial leaders committed to a more multilateral approach to the twin coronavirus and economic crises.

“We agreed that any premature withdrawal of fiscal and monetary support should be avoided,” Daniele Franco, Italy’s finance minister, told a news conference after an online meeting held by the G20 finance ministers and central bankers on Friday.

The financial chiefs agreed to maintain expansionary policies to help economies survive the effects of coronavirus disease (COVID-19). 

The Italian presidency of the G20 group of the world’s top economies said the gathering of finance chiefs had pledged to work more closely to accelerate a still fragile and uneven recovery.

The G20 is “committed to scaling up international coordination to tackle current global challenges by adopting a stronger multilateral approach and focusing on a set of core priorities,” the Italian presidency said in a statement.

US Treasury Secretary Janet Yellen told the G20 Washington had dropped the Trump administration’s proposal to let some companies opt out of new global digital tax rules, raising hopes for an agreement by summer.

The move was hailed as a major breakthrough by Germany’s Finance Minister Olaf Scholz and his French counterpart Bruno Le Maire.

Scholz said Yellen told the G20 officials that Washington also planned to reform US minimum tax regulations in line with an Organization for Economic Co-operation Development (OECD) proposal for a global effective minimum tax.

“This is a giant step forward,” Scholz said.

 Franco said the new US stance should pave the way to an overarching deal on taxation of multinationals at a G20 meeting of finance chiefs in Venice in July.

The G20 also discussed how to help the world’s poorest countries, whose economies are being disproportionately hit by the crisis.

On this front there was broad support for boosting the capital of the International Monetary Fund (IMF) to help it provide more loans, but no concrete numbers were proposed.

To give itself more firepower, the IMF proposed last year to increase its war chest by $500 billion in its own currency called the Special Drawing Rights (SDR), but the idea was blocked by former US President Donald Trump.

“There was no discussion on specific amounts of SDRs,” Franco said, adding that the issue would be looked at again on the basis of a proposal prepared by the IMF for April.

Deal signed to stimulate Saudi private sector

Updated 27 February 2021

Deal signed to stimulate Saudi private sector

The Saudi Center for International Strategic Partnerships (SCISP) signed a memorandum of cooperation with the Council of Saudi Chambers (CSC) to boost the private sector’s role in international partnerships.

The move aims to stimulate the private sector’s participation and sustainability by providing all necessary support to achieve the objectives of the Kingdom’s international strategic partnerships.

SCISP CEO Faisal Al-Sugair said the agreement is part of the measures aimed at involving all relevant actors in the Kingdom’s economic system to achieve the strategic goals of Vision 2030.

The memorandum includes exchange of information, data and necessary reports that support the two parties’ work, Al-Sugair said.

Established in 2017, the SCISP is a government entity linked to the Council of Economic and Development Affairs.