Yemen's central bank in the southern port of Aden says it is ready to supply commercial and Islamic banks with additional foreign currency.

This would enable them to provide letters of credit (L/Cs) to finance imports of goods into the country, which has been pushed to the brink of famine by a four-year civil war.

Divided central bank

The central bank of Yemen itself is currently split into two rival head offices.

One central bank office is supported by Saudi Arabia and located in the southern port of Aden, the seat of the Riyadh-backed government.

The other is in the Yemeni capital, Sanaa, now controlled by the Houthi group that is backed by Iran and has been fighting a Saudi-led coalition for almost four years.

Saudi loan

Saudi Arabia last year lent US$2 billion to the Aden based office to help finance imports of basic goods.

The Aden branch has now issued a circular saying it was ready to sell banks foreign currency at a rate of 506 rials to the US dollar or at market rates, whichever is lower.

Additional funding

The circular says this would cover L/Cs and financing guarantees for imports of goods not covered by the US$2 billion grant from Saudi Arabia.

The rival central bank in Sanaa did not receive funds from the Saudi loan and traders will far more likely obtain L/Cs from the Aden branch.

This article represents the views of the author and not necessarily those of the ICC or Coastline Solutions.