Economic turmoil deepens as Yemen’s rival factions feud over Houthi coin rollout

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Tensions escalated Sunday between Yemen’s rival warring factions after the Houthi group announced issuing a new 100 riyal coin, a move swiftly rejected by the internationally recognized government as a “dangerous escalation” involving counterfeit currency.

The Houthi-controlled Central Bank of Yemen, headquartered in the capital Sanaa, unveiled its plan to circulate the new 100 riyal coin starting Sunday to substitute banknotes of the same denomination that have been rendered damaged and unusable.

Hashim Ismail, the Houthi-appointed governor of the Sanaa central bank, told a press conference that “the currency is ready and has been minted in accordance with international standards.” He assured the public that introducing the new coin “will not affect exchange rates” as it is solely intended to replace damaged 100 riyal notes.

However, the government-controlled Central Bank of Yemen, based in the country’s temporary capital of Aden, swiftly rebuffed the Houthi plans in a strongly worded statement. It warned all parties against utilizing “any currency issued by the bank’s Sanaa branch seized by the Houthi militia.”

The statement described the Houthi coin launch as “a dangerous and unlawful escalatory act” that fails to consider citizen interests. It denounced the new currency as “counterfeit” since it was issued “by an illegal entity.”

The clash between the rival central banks underscores how Yemen’s central banking system has been caught in the crossfire of the nation’s larger conflict since the internationally recognized government was compelled to relocate from Houthi-held Sanaa in 2015.

The government has accused the rebels of draining the Central Bank’s Sanaa reserves to fund their war effort, while the Houthis say the bank’s relocation crippled their ability to pay public sector salaries.

The standoff has resulted in a glut of tattered banknotes circulating in northern Yemeni regions under Houthi control during the past years, as the Houthi group refuses to accept newly issued currency from the internationally recognized government, compounding economic woes in the war-ravaged Arab nation.

The ongoing dispute over the newly minted Houthi currency is being viewed by experts as an escalation of economic warfare between Yemen’s warring factions, exacerbating the nation’s dire economic turmoil.

They assert that this economic belligerence between the warring sides will severely compound civilian suffering and further devastate Yemen’s deteriorating economic circumstances.

Yemen has been embroiled in a protracted armed conflict since late 2014, when the Iran-backed Houthi rebels seized control of the capital Sanaa, compelling the internationally recognized government to relocate its operations to the southern port city of Aden as a provisional capital.

As the conflict enters its tenth year, Yemen finds itself in the throes of a calamitous humanitarian crisis. According to United Nations data, over half of the country’s population is in desperate need of assistance, with an estimated 17.8 million people, 50% of them children, requiring health aid.

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