Yemen’s central bank nearly doubled its interest rate today in an effort to stabilise the riyal after violent demonstrations against a plunging currency, Reuters reported.
State news agency Saba said the rate on certificates of deposit had been hiked to 27 per cent. An official at the bank said the previous rate had been 15 per cent 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 Houthi group and the government fled.
Most Yemenis now live in Houthi-controlled territory, while the government of exiled President Abd Rabbuh Mansur 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 per cent. It did not say what the previous rate was.
The United Nations says more than eight million 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.
The bank also announced today that it will tighten foreign exchange rules and Yemenis will not be allowed to take more than $10,000 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.