The War of the Dollar … The story of Economic Monstrosity?
The simple Yemeni citizen has shed his dreams in the labyrinth of the riyal against the craziness of the dollar ,the markets have been caught in terms of the prices of consumer goods and basic commodities, and hunger in Yemeni homes has been settled due to a systematic economic war practiced by the US-backed Saudi-led coalition through printing the national currency without a cover , speculating in the cash market , floating riyal and corruption.
The value of the Yemeni currency (riyal) has deteriorated since the Central Bank was moved from Sana’a to Aden and its fall accelerated against the dollar’s rise since mid-August after the dollar exceeded 600 riyals by an increase of over 200% and made 60% the riyal lose 60% of its value, raising the fears of citizens, whom hunger united after their geographical division (control) of economic disaster separated them as a result of the reflection of this rapid rise in the prices of basic materials and threatened the stability of living volatile, whereas the relationship between the level of prices and the value of money is an inverse relationship ,whenever the prices get higher , the purchasing power of money gets decreased and when the price curve is always on the rise. ,the confidence of individuals on the national currency weakens, which increases the expectations of the collapse of the national currency, known as purchasing power parity theory.
According to a local economic study, the trend of commodity prices is always rising at a rapid pace, which has always made domestic inflation rate much higher than the global inflation rate.The story of the rapid deterioration of the riyal and the cessation of economic stability began when the so-called “legitimate” government printed currencies without a foreign monetary cover , a cover of gold or GDP, which caused the rise of the demand for the dollar in the local market from traders and investors for fear of the erosion of their capital as a result of randomization which aimed at withdrawing the currency from the market for political purposes and raising the price of the dollar in order to drain the national economy.
According to a World Bank report, printing 400 billion riyals without a cover caused the market currency to rise to 1700 billion and a net decline of net foreign assets to 1.562 billion dollars, in addition to the circulation of a damaged currency of 45 billion riyals without a cover, which made the printed currency ,without the economic controls to print money , without a real value but only printed paper. According to the annual report of the Central Bank of Aden, the total price of the printed currency during the current year 2018 reached 600 billion riyals, 420 billion riyals of which reached to the bank in Aden , while 180 billion were expected to reach in November next year, according to the report..
Whereas 200 billion riyals of the category (1000) and (500) were printed in early February, followed by the arrival of new shipments of printed money in the Russian company «Gornak» of categories (100, 200 and 250), the bank started to print a trillion riyals during the year 2018, equivalent to 5 billion dollars, under the pretext of rplacing the damaged money, which represents 90% of the volume of cash rolling and face the liquidity crisis and pay salaries of state employees in areas of the so-called (legitimate government), loyal to the US-backed Saudi-led coalition.
While the Economic Committee, which consists of the professors of the economy in Yemeni universities , government departments and the private sector, which worked under the supervision of the Ministry of Higher Education and Scientific Research in a recent report , a copy of it obtained by (Saba) that the cash liquidity in Yemen reaches 1330 billion , but its circulation is used outside the banking system, which is equivalent to 5.2 billion dollars, confirming that it is one of the reasons of the crisis in the Yemeni banking system , while the estimated increase in cash circulation outside the banking system during the first half of 2016, reached 298 billion riyals.
He added that increasing of money supply through deficit financing (inflationary version) will have disastrous effects and erode the real income of citizens as a result of the deterioration of the purchasing power of the national currency ,whereas Aden Bank put the source of safety(rainbow), in the category of the printed thousand and characterized it with its light green color , the palace of Sayoun in Hadramout on the front face , the general view of the old Sana’a on the back face and its small size 155 mm in length and 69 mm in width .
This description, especially the rainbow, did not achieve the happiness and well-being for the Yemenis but caused the riyal collapse as five new categories were printed without a cover in less than eight months.
The Salvation Government has tightened its dealings with the printed categories (1,000 and 500) without a cover, then the decision was quickly adhered to, but the banking market in Sana’a quickly taken new categories and used them in the markets.
The inflation of the riyal means that the interest rate against other foreign currencies will be determined according to the supply and demand, not according to a fixed price determined by the government, and the brutality of the dollar affected the ration market, which has seen a rising panic which worried the citizen who moved between a market and another to find a cheaper price from a random and moody rise by retailers and wholesalers.
The Yemeni News Agency (Saba) toured the quay of concern of citizens of the new living disorder the maze of monetary policy, and perceptions of the reasons for the collapse of the riyal and addresses of treatments.
A report issued by the Ministry of Industry and Trade during the third week of August and the first of September revealed the rationing situation of the local market, whereas it confirmed the availability of sufficient quantities of food commodities in all provinces without detecting any bottlenecks in any foodstuff or consumption with normal flow of goods.
The report also noted the high prices of importers of Australian wheat grain of Yemeni International Food Industries Company (Al-Habari), Al-Saeed Company for Trading and Flour Mills, and Yemen Company for Industrial Investments (Fahim)
with 2.3% and 3.6% against the rise in the prices of producers of flour of Al-Sanabel and the Island with about 9,7
and the lack of Abu tree flour.
The retail prices of the consumer were 10% higher than the Australian wheat flour, grain and flour, and the prices of Al Sanabel and the Island flour increased to 7.1%.Brazilian and Happy sugar price got higher, powder milk Nido and Anchor price got increased to about 10% , Dano milk was unavailable with the rate of 5,2%, and the locally grown margarine ,Qamariah, increased to about 17.6% and The Blue Girl to about 10% , and Thai rice 40, 50 kg price got increased to 18.5% and 1% , 3.
According to the report, the price of Pakistani rice (Basmati) ,Luxury , Indian (Mezze) ,Diwan ,40 kg, was stable , in addition to the stability of the prices of locally manufactured oils (Chef and Cook) and fresh fish , Thamad and the carcass , the colt , red and white meat and the eggs.Construction materials of (Turkish) iron, (Malaysian and Swedish) timber, (national, Amran and Hadhramout) cement also witnessed price stability.
The report pointed out that the field teams were able to control 102 and took legal action against them. The Chamber of Operations has also received 5 reports that have been sent to those in charges .
Fear … ..?
Abd al-Salam al-Jabri went out to buy the groceries from the grocery store next to his house, where he was surprised at the insane and rapid rise in prices, which forced him to return to his house and asked his wife to prepare an (urgent) dinner from what they had in the house for his children until he could collect his fear due to high prices after he had needed extra five hundred riyals for the dinner price.
In the morning, he thought that high prices would be only a savagery for traders (at night) but would be controlled in the day , finding his neighbor’s grocery store closed until another notice.
Al-Jabri inquired about the sudden closure of Moussa’s grocery store. The answer was that he was waiting for the stability of the dollar exchange rate , therefore ,he could determine prices that suit his opportunistic mood.
“I have been familiar with Moussa’a grocery store without bargaining with him about his multiple prices , but after he had closed his , I recognized decided to buy from another grocery store which sells at a cheaper price than after Moses had proved greed and monopoly of the commodity and using the needs of people, says Abdel Salam, 50,.
Aisha was surprised at raising the price of the sweet to 70 riyals after it costed 50 riyals, whereas she used to show sympathy to (Ibrahim) ,10 years, who used to adher to the pier of the gate of a bus stop and races its steps to convince her to buy from him , so that she always bought from him with 50 riyals, but in that morning , he ran towards her telling the higher new price of the sweet , justifying that with the rise of the dollar . She added”,so I smiled and knew that the distance between the night and the day had its variability in Yemen.
“My fear is doubled” as I bought the basic commodities for the house since the wave of rising prices, which arn’t enough for my extended family of sons, their wives, children, daughters. The wheat bag, which has risen to 13,000 riyals, suffices me and my family of 18 members for only 10 days, so I borrow from the well-known in our neighborhood by in the Directorate of the Seventies and search for aid to give them bread , and what worsens my suffering is that four of my eight children suffer from a “psychological condition”, so this situation makes me choose either treatment or food for them , therefore, I choose “food” because when I see them crazy ” is easier than I find them starving ً “..
For his part, “Nasser” the owner of the grocery “of The Son of Yemen” for food supplies justifies, saying that the price increase is often 20 extra riyals to the goods and didn’t make a problem for the consumer, especially as retailers were buying from wholesalers at a high price and reflected it on the consumer , and in terms of prices of basic materials that rose and temperament of the merchant, Hamdan says”we can not afford the increase in the price of the dollar and the extortion practiced by wholesalers, in addition to the rise in rents and oil. Every increase in the exchange market is moving downwards from the big import companies to small wholesalers to smaller retailers, adding “we recognize that there is greed, but some take advantage of the chaos of the market and the prices as they want “.
Ghost of loss … ..?!!
Abu Bakr sold his store with four million riyals and started a new business of transporting goods between the provinces. When he was asked about the reason for the sale of his because working in the market of supply and demand is profitable, he replied that the continuous rise in goods didn’t protect the retailer from the loss as he had to borrow from the wholesaler under a simple and limited demand for commodities, using the retailer to loss due to lending by the customers to an unknown time as a result of the interruption of salaries and the reluctance of people of luxuries, which lead the trader to sell only light industries for children .The Ghost of loss forced Abu Bakr to sell the grocery store at the same price he bought two years ago and to choose a new job that didn’t not meet the people’s needs …
World Bank report on economic and humanitarian situation in Yemen
The head of the Yemeni Consumer Association, Fadl Moqbel Mansour , said the collapse of riyal against the dollar is because of that the increase in Yemen’s imports of goods and services from abroad is more than 85% , whereas 15%, is covered by the domestic. And any changes in the exchange rate were directly reflected on the prices of food, pharmaceutical and consumer goods, which represents the biggest challenge facing the Yemeni consumer who is suffering to get his needs and his family of the necessary needs under a siege , aggressive campaign , interruption of salaries and stopping the economy and weakening purchasing power.
He also called on the competent authorities to develop urgent solutions , to divert the economy from the war and return the Central Bank to perform its role as well as commercial banks , so that cashiers alone can’t wrestle control over the economy and financial and monetary policy and the international community to put pressure on the countries of the coalition to re-export oil and gas , supply its revenues to the Central Bank ,and fund the food and pharmaceutical cost .
Mansour warned the international community of ignoring the human tragedy in Yemen because the international silence means the fall of 27 million Yemenis in the abyss of famine, which will be a stain on the face of the United Nations and humanitarian and human rights organizations.
Lawyer Abdullah Amer describes the economic situation in Yemen as episodes of stupidity and systematic destruction that happened because of printing the monetary instrument and continued because of lacking control of the banking market, which allowed the flourishing of the speculative market,so money exchange companies spread , monitoring of traders disappeared, therefore, the local marked witnesses greedy traders under the banner of importing through converting the purchased currency from the Central Bank under the pretext of importing abroad to buy goods, and part as deposit in foreign banks.
He added that the indiscriminate import contributed to the waste of currency, calling on the competent authorities to determine channels of imports of major commodities only in accordance with a clear economic policy that excluded the abusers.
Ministry of Industry and Trade … censorship and punishment ….
The Undersecretary of the Ministry of Industry and Trade for the domestic trade sector Munther Al-Shargabi said that the high exchange rate of the dollar reflected directly on the consumer market, which increased the suffering of citizens because of the weakness of the purchasing power of the riyal, which caused the ministry in cooperation with the competent authorities to take a series measures that contributed In the reduction of the monopoly of some traders, whereas the field committees managed to to monitor the traders , wholesalers and retailers according to a chronic plan , taking legal actions against them because the manipulation with the needs of citizens was rejected after the percentage of profit of some basic legal exceeded its limit.
He Indicated that the ministry applied price control on all consumables except dairy products, such as yoghurt, where manufacturers imposed a direct increase on the goods that they distributed at sale markets.
He Pointed out that the private capital and senior traders dealt with high national spirit during the exceptional circumstance experienced by Yemen during the aggressive campaign , siege and economic war that began when the Central Bank was moved from Sana’a to Aden and continued when currency without a cover was printed , which caused the collapse of the riyal ,resulting in a severe economic crisis lived by Yemenis in north and south.
He also urged careless traders to abandon their opportunism and greed and assume their moral and human responsibility towards the homeland and the citizen, confirming that the ministry has determined a hotline (174) for complaints of citizens about the merchants who, monopolied goods, bakery owners who manipulate with the weight of the bread ,and traders who close their shops in front of citizens to receive complaints, taking the necessary actions towards them by sending them to the prosecution of industry and trade and then taking appropriate legal action.
Proposed processes by the World Bank
The director of field monitoring in the operations rooms of industry and trade Hassan al-Shami demanded the Committee of Payments and Foreign Exchange in the Council of Ministers to control the cash market for at least a month ,so that the ministry could prepare a matrix of price list for basic and consumer materials and then being approved by the Council of Ministers and forced the traders to apply it, which will allow the ministry of taking legal procedures in accordance with a clear legal model.
He indicated that the continuation of fluctuations in the exchange rate and the deterioration of the national currency will make traders to increase the prices of goods , major companies close their doors until the stability of the banking market , and wholesalers to sell their goods to retailers in dollars or equivalent at a volatile price.
He pointed out that the ministry dealt with the traders with the principle of the “common price” and not the changeable price according to the exchange market, whereas if the price of the wheat bag in the market was (9800), traders couldn’t raise it, under the pretext of the rise of the dollar, to (13000) riyals.
He confirmed that the ministry was making double efforts to stabilize prices, whereas 10 meetings with government authorities , managers of the offices of the ministry in the provinces , banking companies, businessmen , representatives of the Chamber of Commerce and Industry and others were held to discuss the high prices in the ration , adding that the responsible parties should bear responsibility for controlling prices and accounting for the corrupters because punishing a corrupter merchant would make greedy traders stop using the citizen .
The Yemeni Riyal is known as the unit of the currency in Yemen , represents the national currency of the Republic of Yemen ,and embodies the sovereignty of the country and the independence of its monetary and financial policies. Since the development of the monetary system in the world through the transformation of the monetary system base (precious metal: gold and silver) to paper system , whose basis the unit of paper money, the main concern of the decision makers was to stabilize a cash unity because is an efficient measure of the price of goods and services, a tool for the exchange of goods between people, the settlement of future payments and a store of the national wealth.
The stability of the monetary unit is a basic and necessary condition for the stability of people’s transactions in their economic activities all over the country or in the context of external economic dealings between States, while currency instability causes damage and loss to individuals’ wealth, livelihood and economic and social rights.
Salvation’s responses ……
The report of the Committee on Payments and Foreign Exchange under Prime Minister stated the reasons for the rise of the dollar because of printing large amounts of currency by of the so-called (legitimate government) in addition to the development of channels of buying and selling the difficult currency at a high difference , which opened access to speculation. The statement considered the rise in exchange rate due to the background of speculative speculation as part of the immoral economic war, indicating that the Committee would implement all options and possible alternatives to provide the needs of commercial movement and made foreign exchange sources at appropriate rates , which would reflect on the price of the riyal, whereas the Commission has an executive plan to legalize the import bill, which would decrease pressure on the market and encourage domestic production levels, calling on traders not to create monetary tension in the operations of the demand to buy the difficult currency without realizing the results.
For its part, the Association of Yemeni cashiers circulated news not to deal with 10 of the unapproved exchange companies which would be closed as directed by the Central Bank of Sana’a, while 8 exchange companies were in the waiting lists until correcting their situation , 7 banking companies were approved to deal with on cash ,and 4 exchange companies were stopped for not complying with the instructions of the Central Bank.
The statement of the Association of Yemeni cashiers confirmed that technicians would go to the unapproved exchange companies to stop the transfer network and keep the exchange system and called exchange companies not to be affected by the exchange rate in the areas of rise and start from 10 am at the lowest exchange rate since 3 days ago , try to drag the price (down) ,deal with buying and selling and between cashiers as usual, and tighten control on the transfer of money between provinces.
For his part, an official in the company for Exchange and transfers of Rashad Bahir, who chose the slogan (manipulation with the national currency is manipulation with the lives of citizens) for his company stated (that the printing of new categories of the national currency (riyal) and the scarcity of difficult currency caused a surplus of the local currency , considering that the rise in the exchange rate didn’t only affect the citizen but also the money exchange companies as the exchange companies were the first to face the currency manipulation and stopped selling and buying during periods of rise, adding that the recovery of the economy is the best solution to face the economic war ,so the exports increase ,the demand of the national currency will rise to fund the prices of exports, which means the currency direction will rise in the exchange market.
Like those in the military fronts, the Salvation government must take its role in creating a front facing the economic war, saving the simple Yemeni nation from the pain of getting lost in the piles of hunger .
In March 2015, the US -backed –Saudi-led coalition started a war against Yemen with the declared aim of crushing the Houthi Ansarullah movement, who had taken over from the staunch Riyadh ally and fugitive former president Abd Rabbuh Mansur Hadi, while also seeking to secure the Saudi border with its southern neighbor. Three years and over 600,000 dead and injured Yemeni people and prevented the patients from travelling abroad for treatment and blocked the entry of medicine into the war-torn country, the war has yielded little to that effect.