Historical Sketch

The Ottoman expansion reached the southwest tip of the Arab peninsula in the mid-16th century. They exercised control only over the coastal regions, the highlands remained under local rule. The Zaydi were the dominant power here since the late 17th century. In 1873, the highlands were finally conquered, and Yemen was under Ottoman suzerainty. The British expansion in the South after the 1840s had meanwhile reduced their influence. After the defeat in World War I, Turkey withdrew, and the Zaydi gradually gained control. In 1926, the Mutawakkilite Kingdom of Yemen was established and remained until the revolution of 1962, when the monarchy was overthrown, and a republic was proclaimed after the Egyptian model. 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. In 2011, following the Arab Spring protests, the government was overthrown, which turned into an open civil war after 2014. This gradually led to a factual partition along the former border, with the North held by forces from the highlands and the South by the ousted former government.

Monetary History Overview

Traditionally, Yemenite accounting was based on the silver Maria Theresa Thaler, which was common everywhere on the Arab peninsula. Turkish and British Indian coinage were accepted in trade. The independent Yemenite kingdom did not introduce a distinct monetary order. The silver Maria Theresa Thaler remained the accounting standard, and around 1924, the Yemeni state began to produce its own silver Riyals in this standard, together with a multitude of subsidiary coppers. In 1962, the monarchy was overthrown, which triggered a thorough modernization of the state and its institutions. In May 1964, the Yemen Currency Board began operations, and the Yemenite Riyal became the national currency. It was initially pegged to the Pound Sterling but did not follow the 1967 devaluation and repegged to the US Dollar. In April 1975, Yemen was the last country in the World to decimalize the currency, after that 100 Fils went to the Riyal instead of 40 Buqshas, a counting that dated back to the times of the silver Thalers. The Riyal's official rate had become inoperative in 1973 and got replaced by a 75% lower effective rate. During the 1980, the Riyal gradually depreciated by another 60%. 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. The Riyal got devalued by more than 90% in two steps until 1996. Then the exchange rate was floated and gradually declined afterwards. After the outbreak of the civil war, a peg to the US Dollar has been reinstated in 2016, but the official rate has increasingly become inoperative afterwards. In the early 2020s, the Central Bank split up into Aden and Sana'a branches which were under control of the warring factions. The Aden branch has abolished the Dollar peg in late 2021 and established a market rate based on currency auctions.

North Yemen joined the International Monetary Fund (IMF) on 22.05.1970.

Currency Units Timeline

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Monetary History Sources