Yemen’s central bank has told traders and local banks it will stop proving lines of credit for the import of sugar and rice at the official exchange rate, merchants and local bankers said on Friday.
With this move taking immediate effect, it is likely that the country’s humanitarian crisis further worsens. Yemen is in the midst of a war between the Iran-allied Houthis, taking hold of the capital Sanaa, and President Abd-Rabbu Mansour Hadi’s government, which is supported by an Arab coalition led by Saudi Arabia.
Until the beginning of February, the central bank had covered all the country’s import needs of medicine, wheat, rice, sugar and milk at the official exchange rate of 215 riyals to the dollar, Reuters reported citing a Yemeni merchant.
“With this decision, the lines of credit would be limited to wheat and medicines only,” said the merchant, who asked not to be named.
Also, a banker confirmed this, stating that the central bank had clarified it was no longer able to provide cover for imports at the official rate and had called on merchants to buy foreign currency on the black market, where the rate is 256 riyals to the dollar.
The U.N. Food and Agricultural Organization (FAO) has previously warned of a “staggering” crisis, saying famine looms as over half the population, or some 14.4 million people, are short of food.