A truce between Yemen’s internationally recognised government and the Houthi rebels has helped bring a semblance of stability to the country since it began at the start of April, considerably reducing hostilities on the country’s front lines, and making many Yemenis hopeful that an end to the war could be in sight.

But Yemen’s economy, and in particular its currency, continues to struggle, leaving millions of Yemenis in poverty, and casting doubt on the capability of the government’s Presidential Leadership Council (PLC), which was sworn in on April 19.

At the time, the Yemeni rial experienced a welcome boost in its value, but the sudden rebound of the riyal has been short-lived, and its value has dropped once again.

In government-held parts of the country, $1 is exchanged for 1,100 Yemeni rials, an unofficial rate that is used by all money exchangers, and is similar to the level before the PLC bounce.

That is despite a pledge of $3bn from Saudi Arabia and the United Arab Emirates to prop up the Yemeni economy.

“The national currency devaluation is unlikely to be fixed soon, and this crisis persists for multiple reasons,” Wafeeq Saleh, a Yemeni economic researcher, told Al Jazeera.

“The new leadership and the [government-run] Central Bank of Yemen in Aden (CBY-Aden) need to introduce stricter financial and monetary measures to control and monitor the diverse banking activities in the country. What they have done has not been adequate to revive the value of the local currency,” Saleh said.

Even when the CBY-Aden, which operates separately from a branch of the CBY in Houthi-controlled Sanaa, issues directions and novel procedures to counter the currency devaluation, the rial has kept falling in value against foreign currencies.

“The banking industry is still under the hegemony of the black market and the money speculators, especially as most money exchange companies, which possess huge sums of local currency, operate outside the control of the CBY-Aden,” Saleh said

The civil war pitting the Iran-backed Houthis against the Yemeni government broke out in 2014 when the Houthis took Sanaa, before a Saudi-led military intervention in March 2015. Hundreds of thousands of people have died as a result of the conflict since then.

On the economic front, inflation, unemployment, a decline in exports and currency depreciation have been persistent woes.

Since 2019, the Houthi authorities in Sanaa have banned the use and circulation of new banknotes printed by the Yemeni government.

The decision triggered divergent currency values – while $1 equals about 1,100 Yemeni rials in government-run territories, it is currently being exchanged for 557 Yemeni rials in Houthi-held governorates.

Shortage of hard currency

Merchants and companies in Yemen require foreign currencies such as the US dollar to import food – which the country imports 90 percent of – consumer commodities, fuel, or other goods.

The $3bn deposit from Saudi Arabia and the UAE was intended to supply the CBY-Aden with hard currency.

However, the amount has still not arrived at the CBY.

“The financial support pledged in April by Saudi Arabia and the UAE has not reached the accounts of CBY,” said Saleh. “This is another reason the Yemeni rial has lost its post-PLC recovery.”

Abdulrahman Ali, an accountant at a private exchange company in Aden, told Al Jazeera that there is still a shortage of foreign currency in the market, and a new political leadership does not necessarily indicate that things will get better.

“I am glad we have new leadership,” Ali said. “However, what matters is the vision and strategies they have that can lift the nation from this miserable economic condition.”

Another factor contributing to the currency devaluation is the preference of many Yemenis to keep their savings in foreign currencies as a safeguard against the devaluation of the Yemeni rial, according to Ali.

Reversing the currency fall

The Yemeni government’s new leadership has indicated that it recognises the formidable economic challenges the country faces, and is now trying to get more regional support.

On June 6, Rashad al-Alimi, the head of the PLC, began official visits to Kuwait, Bahrain, Egypt and Qatar, with the economy high on the agenda. However, tangible outcomes are still lacking.

“The PLC’s overseas visits have so far not resulted in a positive impact on the banking field in Yemen, and no pledge of financial support to the CBY has been announced during these tours,” said Majed al-Daari, an economic commentator and editor-in-chief of the Moragboon Press news site. “Pledges without implementation cannot revive the Yemeni rial.”

Amid the continued political and economic instability, economists have articulated several steps they believe can help reverse the Yemeni currency’s fall, such as kickstarting oil and gas exports, which were affected as a result of the war.

“The government will have to revitalise its resources, especially oil and gas, to generate revenues in foreign currencies. It also needs to reduce government expenditures in foreign currency. For example, all Yemeni officials’ salaries should be paid in Yemeni rials, not in dollars,” Saleh explained.

In late 2021, the CBY-Aden began weekly auctions of the US dollar, a move aimed at preventing the Yemeni rial from falling further by providing hard currency to importers and commercial companies. However, the adopted mechanism has not revived the currency’s value or stopped its decline.

A recent report by the Studies and Economic Media Center, a Yemeni non-profit research centre, indicated that the CBY-Aden’s mechanism of selling foreign currency in auctions cannot be a sustainable solution to the rial depreciation crisis.

“There is a need for a permanent source of cash, and this will only be achieved by oil production and exporting it at full capacity so that the auctions continue,” the report said.

As for Yemeni civilians, the continued devaluation of the Yemeni rial has amplified their frustration with the war and Yemen’s political leadership.

“For me, the steady fall of the rial means that there will definitely be price hikes. This makes life harder,” Fahd Ahmed, a taxi driver in Aden, told Al Jazeera. “The formation of the PLC in April and the subsequent drop of the US dollar against our currency made us positive. Now our hopes of an economic improvement have evaporated.”