Economic researcher warns of catastrophic collapse, widespread bankruptcy in Aden
ADEN, Aug. 08 (YPA) – An economic researcher familiar with Saudi-led coalition affairs has confirmed that the sudden appreciation of the local currency against the dollar in areas under coalition control poses a serious and long-term threat, warning of potentially devastating economic repercussions.
In a Facebook post, researcher Abdul Nasser Al-Mowda explained that this appreciation is economically unjustified, as there has been no actual inflow of foreign currencies such as the Saudi riyal or the US dollar, and the Central Bank in Aden has not received any cash deposits or financial pledges to support this rise.
He pointed out that the sudden rise may be due to the injection of large amounts of hard currency in a short period, which prompted speculators to sell their reserves for fear of incurring losses. This resulted in an abnormal decline in the price of foreign currencies and a temporary improvement in the value of the Yemeni riyal.
Al-Mowda warned of the fragility of the current situation, which could quickly reverse, fueling a new wave of dollar price increases, which would cause significant economic damage to individuals and businesses. He also predicted that many companies would face the specter of bankruptcy, while thousands of families would fall into debt traps that would be difficult to repay.
He also warned of the impact of sharp fluctuations in the exchange rate on commercial transactions that rely primarily on forward sales. Retail stores may be forced to lower prices to accommodate the decline in foreign currencies, eroding their profits and threatening the availability of essential goods in the market. These goods may subsequently appear at high prices on the black market.
Al-Mowda added that this sudden rise in the value of the Yemeni riyal lacks any solid economic foundation and appears to be the result of improvised decisions and exceptional circumstances, making it vulnerable to a catastrophic collapse once demand for foreign currencies returns to high levels.
YPA