Saudi deposits $200m to bolster Yemen riyal

Saudi Arabia is to deposit $200 million in the Yemeni central bank to help stem a slide in the value of the riyal that has caused food prices in the famine-threatened country to soar. King Salman “approved a request” from Yemeni President Abedrabbo Mansour Hadi to provide the emergency credit, the official Saudi Press Agency reported late Monday.

The oil-rich kingdom, which leads a coalition in support of Hadi’s government, already deposited $2 billion in the central bank in January to try to shore up the riyal, which has lost more than two thirds of its value since the coalition intervened in March 2015. The new deposit comes less than two weeks after the central bank, based in the government’s temporary capital of Aden, raised interest rates on deposits to an all-time high of 27 percent after the riyal slid more than 36 per cent since January.

The slide has seen a sharp rise in food and fuel prices that triggered protests across the government-held south in early September and prompted the government to raise public sector salaries by 30 percent. The Yemeni riyal rose on news of the latest Saudi deposit, trading at just under 700 to the dollar on Tuesday against 820 the previous day, according to money-changers in the rebel-held capital Sanaa.