What is the 'Yemeni Rial - YER'

The Yemeni Rial (YER) is Yemen’s official currency.

BREAKING DOWN 'Yemeni Rial - YER'

The Yemeni Rial (YER) is technically divided into 100 fils, but the government has not minted fil coins since 1990 and they have largely fallen out of use. The Central Bank of Yemen oversees issuance of the currency as part of its mandate to implement monetary policy in the country. The central bank’s other primary tools include establishments of interest and discount rates, bank reserve requirements and issuance of certificates of deposit in addition to common interventions such as open market operations and activity in foreign exchange markets.

Although the Central Bank of Yemen formed in 1971, its current iteration dates from 1990 when North and South Yemen reunified in the wake of the collapse of the Soviet Union. At that point, the Central Bank of Yemen merged with the Bank of Yemen, managed by a board of directors and headquartered in Sanaa. After unification, the country accepted the South Yemeni dinar as legal currency until 1996 at an exchange rate of 26 dinar to 1 rial.

The Central Bank of Yemen undertook a liberalization program starting in early 1995, allowing unrestricted exchange of foreign currencies both within the country and abroad. The Yemeni rial’s exchange rate has also floated freely since 1996.

North and South Yemen

Yemen became divided after the fall of the Ottoman Empire. North Yemen became an Islamic state ruled by the Zaidi sect of Shia Islam, while South Yemen became a British protectorate due to the port of Aden’s inclusion in British India. North Yemen formally became a republic in 1962, while South Yemen gained independence from colonial Britain in 1967. Politics in South Yemen became dominated by Marxist parties, drawing support of the Soviet Union, which generated conflict between the two countries resulting in armed conflicts in 1972 and 1979. As the Soviet Union began its slow dissolution in the late 1980s, the two governments agreed to a unification process. In 1990, a united Yemen established Sanaa as its capital, but the political situation deteriorated quickly, plunging the country into civil war in 1994. Unification held uneasily until development of a civil war between Saudi-backed Houthi rebels and the government of Abdrabbuh Mansour Hadi, who took over the presidency from Ali Abdullah Saleh in 2011 following a Yemeni uprising related to the Arab Spring.

In part due to its persistent political struggles, Yemen remains among the poorest countries in the region, with high unemployment. Oil and natural gas production dominate its economy, but its oil reserves number far fewer than those of its neighbors.

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