Yemeni rial appreciates against dollar, but prices remain high
Yemenis were happy by the appreciation in the value of the Yemeni rial, thinking that now economic conditions will improve, however, the stronger rial has not yet helped alleviate the problems of high prices and inflation.
Abdu-Raheem Al-Maes, a Yemeni citizen, said that “the Yemeni people don’t evaluate the economic situation based on the appreciation or depreciation of the rial, as the majority of them are illiterate or lowly educated. The people are too busy scratching a living to monitor the fluctuations in currency.”
He added that what was important for improving living standards was not the currency regaining strength, especially as people have become accustomed to the riyal continuously depreciating.
The political deadlock which dragged on for over a year has taken its toll on Yemenis’ lives. Many businesses and companies closed their doors over the last year and thousands of workers were laid off. The already high unemployment rate has spiraled yet higher still.
In a survey last month, the World Food Program indicated that over five million Yemenis are now suffering from food insecurity and require urgent emergency assistance.
Saed Abdul-Momin, an economic and strategic researcher, told the Yemen Times that “it is not necessarily true that commodity prices go up or down due to currency appreciation or depreciation. Prices are affected by several factors.”
“However, in Yemen every appreciation of the dollar against the riyal is accompanied by an increase in the price of all commodities, especially those that are imported. But the reverse is not true. When the riyal bounces back, prices remain as they are or decrease only slightly,” he said.
He attributed this pattern to the weakness of national production, the dependence of the Yemeni economy on foreign imports, and traders’ efforts in keeping prices high in order to yield more profits.
“During the last meeting of the General Assembly of the Chamber of Commerce and Industry to discuss the sales tax law, Hasan Al-Kabous, the chairman of the board said, ‘The suspension of hundreds of tax numbers is an arbitrary measure that badly affected commercial activity. Moreover, it has had a detrimental effect on citizens’ lives as it pushed up the price of commodities and led to their scarcity. As long as government agencies suffer from paralysis and disability in the face of increasingly rising prices, the people will bear the ugly brunt of high pricing’,” Abdul-Momin added.
Abdul-Momin predicts that prices will be stable for a short period of time whilst people are still uncertain about the future. After that, people will start calling for the lowering of prices, especially for the lowering of transport fares.