Historical Sketch

The Ottoman expansion through the Arab peninsula never reached the South and Southeast, although the formal suzerainty was proclaimed. In 1839, the British East India Company occupied the city of Aden and established a trading post administered out of India. During the 19th century, British influence began extending to the local states of Hadhramaut. In 1937, Aden became a crown colony of its own, the local states were combined into two protectorates. Decolonization began in 1959, when six states from the Western Protectorate joined to form the Federation of Arab Emirates of the South. Starting in 1962, additional states were integrated, including the colony of Aden in early 1963, and the name was changed to the South Arab Federation. The three states of the Eastern Protectorate (Qu'aiti, Kathiri, Mahra), as well as Upper Yafa in the Western Protectorate, remained apart. In 1967, a revolution overthrew the Federation and abolished the local monarchies. The four remaining states were annexed to the newly established People's Republic. The end of Soviet Communism also terminated the support for the Socialist government of South Yemen. Consequently, the two Yemenite states merged into the (Unified) Republic of Yemen.

Monetary History Overview

Since Aden had been part of British India for a century, Indian accounting was introduced without distinct legislation. The different states of the Hadhramaut, later to become the Aden Protectorates, did not introduce monetary orders of their own. Like everywhere on the Arab peninsula, the Maria Theresa Thaler was widely accepted in trade, and Indian currency entered from the British colony and though coastal trade. Occasional subsidiary coins were issued in the Qu’aithi and Kathiri states in the Eastern protectorate, as well as in Lahaj in the West. The establishment of the Aden Colony and Protectorate in 1937 did not alter the monetary situation. Only after Indian independence, Aden adopted the East African Shilling in 1951, the common currency of the British colonies along the East African coast. The Indian currency was outmoded while the Thalers remained tolerated. The post-colonial Federation of South Arabia established a currency authority in April 1965, and the South Yemenite Dinar became the national currency. It was at par with the Pound Sterling and followed the devaluation of 1967. Almost at the same time, the 1967 revolution overthrew the Hadhramaut monarchies, and the Federation attained full independence as People’s Republic of South Yemen, later People's Democratic Republic of Yemen. The currency remained unchanged until early 1972, when the Dinar repegged to the US Dollar. Due to the political and economic isolation, the official exchange rate was largely inoperative. In early 1990, the two Yemenite states merged. The currency of the former North Yemen was introduced everywhere. As a preparation, both Yemenite currencies were devalued in February and April and pegged to one another afterwards. The South Yemenite currency was withdrawn by end 1994, but as the exchange proved difficult in the remoter areas it remained tolerated until mid-1996.

South Yemen joined the International Monetary Fund (IMF) on 29.09.1969.

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