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Flash Update 8: YER Exchange Rate Volatility (11 October 2020 Week1)

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The Flash Update for Exchange Rate Volatility consolidates daily exchange rate data collection throughout Yemen by CCY partners. The data is split between the two main economic spheres: De Facto Authority (DFA) and the Internationally Recognized Government (IRG). This flash update is meant to give an insight into the exchange rate and allow the actors responding to the crisis to make more informed decisions. Methodology: The analysis is predicated on assessing the averages of exchange rates between the spheres of influence for both actors. Enumerators were told to assess three exchange shops per district. However, due to travel constraints and the size of towns where enumerators are present, assessing three shops daily may not be possible.

Key findings:

• The Central Bank of Yemen closed all money transfer markets at the end of September, with the aim to roll out a new single transfer market in early October
• The goal of the new single transfer market, called the Yemen Financial Services, is to stem the depreciation of the YER and help bolster the falling currency
• IRG vs DFA exchange rate variation currently stands at a 25% difference
• The economy is still suffering due to the impact of COVID 19, mainly in trade and travel
• Remittance flows from Yemenis abroad into Yemen have continued to stagnate (see CCY Remittance tool)
• Clashes between STC and IRG continue to take place sporadically
• Due to a lower supply of USD, exchange shops have irregular hours of operation

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