The Central Bank of Yemen (CBY ) announced on Saturday that it will issue a new 1,000-Riyal banknote and will start trading in the next few days as the riyal continues to fall, falling to 475 riyals per dollar since the beginning of last week.
A bank official for the “New Arab” that the central bank has printed 180 billion Yemeni riyals of the new banknote, which shows a smaller size of the old banknote for the same category, but the specifications are poor.
According to the official Saba news agency, the new edition differs from the old banknotes in terms of specifications and degree of safety and shape and size, the size of the new paper 155 mm for length and a width of 69 mm, and light green color. In the front of the paper is a general view of Sayoun Palace in Hadramout. The back side of the paper has a general view of the old city of Sana’a.
The Yemeni government went to print large amounts of money without cash cover to cope with the liquidity crisis, exacerbating the economic crises and threatening further devaluation of the local currency against the dollar, while the government considers such measures necessary to reduce the negative effects of the lack of liquidity.
The Central Bank of Yemen said in early November that it was preparing to print a trillion riyals ($ 5 billion) of banknotes during the current year 2018, to replace the damaged money on the one hand, and to face the crisis of liquidity and pay salaries of state employees in the areas of the legitimate government on the one hand Others, in a move expected to receive serious repercussions on the value of the local currency .
The Yemeni bank said in the annual report that the damaged money accounts for 90% of the volume of cash in circulation, and that the order is to replace the damage with new money through the printing of new money in stages by the Russian company Guznak.
The Central Bank of Yemen has started to print money more and more. The total value of the printed currency during the current year reached 600 billion riyals, of which 420 billion riyals reached the temporary capital Aden (south of the country) and is expected to reach 180 billion riyals this November , According to the Central Bank’s annual report.
Yemeni economic experts have warned of serious repercussions for printing money, which is a significant reduction in the local currency, which will continue to fall despite Yemen receiving a $ 2 billion cash deposit from Saudi Arabia.
Money supply is one of the most important instruments of monetary policy that has a direct impact on exchange rates, said Youssef Said, a professor of economics at the University of Aden, and that the visit to the supply of cash is expected to increase domestic price levels and thus devalue the national currency.
“The increase in money supply through deficit financing will have disastrous effects and will erode the real incomes of citizens as a result of the deterioration of the purchasing power of the national currency, especially as the country has lost its domestic output by about one-third and its exports About 40%, and above all, Yemen is living in complex political and economic conditions. ”
Yemen’s economy is facing a sharp downturn due to the liquidity crisis that deprived the 1.25 million government employees and their families of their main source of income