AL-MUKALLA, Yemen: Traders in Houthi-controlled areas have called for an open strike starting on Wednesday to protest against the rebels’ decision to ban trading with new currency notes issued by the internationally recognized government in Aden.
Workers at local exchange companies told Arab News on Monday that they would shutter businesses until Houthis revoked the decision or provided them with the old notes.
The strike would be the biggest act of civil disobedience against Houthi suppression since the Iran-backed rebels seized power in late 2014.
The Houthis recently banned people from using the newly printed notes, asking them to replace their notes with a virtual currency called the “electronic riyal.” The move has caused widespread anger, with people leaving Houthi areas with their cash to avoid confiscation.
The Yemeni government in Aden has condemned the decision, calling it a pretext for ripping off people and warned against trading with the Houthi currency or handing over money to the Houthis. Several cabinet ministers did not respond to Arab News requests to comment on the decision.
Speaking to Arab News from inside Houthi-controlled areas, people expressed anger as many have kept their savings in the new notes. If they comply with the Houthis, they will be broke overnight.
“The people in the Houthi-controlled areas are experiencing a complex frustration,” a Yemeni journalist who lives in a Houthi-controlled city told Arab News on condition of anonymity for fear of reprisals.
“People face various security and economical troubles caused by the Houthis. They imposed the decision, indifferent to the already deteriorating humanitarian situation,” he said, adding that a large number of people refused to hand over their new notes to the Houthis, fearing bankruptcy or hunger.
Residents say that the decision has created a black market where the new notes are changed with old ones at a lower price. Other residents have resorted to buying hard currencies from the black market at inflated rates. Some are smuggling themselves into government-controlled areas with bags of cash that they deposit into bank accounts or replace with old notes.
A trader in Sana’a who had 8,000,000 Yemeni riyals ($32,000) in the new notes traveled to the central province of Marib to replace them with old notes.
In September 2016, Yemeni President Abd Rabbo Mansour Hadi moved the central bank headquarters from Sana’a to the southern city of Aden to stop Houthis plundering its reserves. From its new headquarters, the bank printed new notes when the country was experiencing a severe cash crunch. The Houthis deemed the new notes illegal and accused the government of sinking the market with liquidity.
Experts say that the Houthi decision would have disastrous effects on the country’s troubled economy, stabilization of the currency and people’s lives.
“This decision is disastrous, improvizational and illogical and will have a wider negative impact on the economy,” Mustafa Nasr, director of the Economic Media Center, told Arab News on Sunday, adding that the Houthis would fail to impose their decision due to public mistrust.
“The Houthis cannot cancel a circulating currency or initiate another one in the same country mainly with the scarcity of the old notes,” he said, arguing that the Houthis are using the currency as leverage to pressure the Yemeni government in Aden to deal again with the central bank in Sana’a.
“The Houthi group would not be able to put into place their electronic riyal. They are using this as a pressure tool on the international community and the internationally recognized government (of Yemen) to restore the central bank in Sana’a.”
Shortly after the Houthis began confiscating the new notes, banks and exchange companies suffered cash problems, triggering them to increase remittance charges five times.
Nasr warned that the larger impact of the Houthi decision would be on the stabilization of the currency, affecting everyone in the country.
“It puts the country’s economy in the wind by undermining monetary policies that led to the stabilization of the riyal this year. It will stifle the private sector and force it into using under-the-table options,” he said.