February 14, 2017 / 11:41 AM / 3 years ago

Exclusive - Yemen's Houthis set import cap, suspend dollar buying

DUBAI (Reuters) - The armed Houthi movement that controls much of Yemen is setting a cap on imports and temporarily banning traders from buying dollars in an attempt to stop the decline of the local rial currency, according to a document seen by Reuters.

Money exchangers count stacks of Yemeni rials in of the Central Bank of Yemen in Sanaa, Yemen, November 15, 2015. REUTERS/Mohamed al-Sayaghi

The moves could aggravate a food crisis in the Arab country, already ravaged by war, hunger and disease.

The document was issued after a meeting on Monday in the capital Sanaa between the Houthis’ deputy prime minister for economic affairs, Hussein Maqbooli, and representatives of banks, money changers and importers of wheat, flour, and fuel.

It said the trade ministry had been asked to set a ceiling on imports and to prepare a list of essential goods needed for the whole of 2017, suggesting a move to ration imports to cope with the financial crisis.

The meeting agreed that importers of wheat, flour, fuel products, telecommunications equipment and tobacco will “stop buying dollars for 30 days, and to oblige money changers not to sell or speculate”, according to the document.

Nearly two years of war between a Saudi-led Arab coalition and the Houthi movement, which is aligned to Riyadh’s arch-rival Iran, has left four-fifths of the population in need of aid.

The war has split the country between two power centres: the southern city of Aden, controlled by the internationally recognised government of President Abd-Rabbu Mansour Hadi, and the Houthi-run capital Sanaa. Both have suffered from the unstable currency.

The Sanaa meeting came about following a sharp drop in the value of the rial, which was trading at 385 to the dollar in Aden and up to 330 in Sanaa. It had been around 310 for most of the past three months.

Officials from the Houthi group could not immediately be reached for comment.

Money changers in Aden, worried by instability and speculation in the market, also suspended trading in foreign currency on Tuesday over the sharp drop in the value of the rial, which some said had increased since Hadi’s government pumped some 200 billion rials printed in Russia into the market in January.

Last week, the U.N. Food and Agriculture Organization said Yemen’s estimated supplies of wheat would run out at the end of March.

The financial situation has became more chaotic since Hadi’s government decided to move the central bank from Sanaa to Aden and name a new governor. The Houthis rejected the move, leaving two rival central banks operating in the country.

The confusion has pushed many Yemenis toward destitution after months of unpaid salaries.

Officials said that the central bank under the control of Hadi’s government was due to meet money changers in Aden to discuss ways to stabilise the rial.

Reporting by Mohammed Mukhashaf, Writing by Sami Aboudi; Editing by Mark Trevelyan

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