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Central bank floats exchange rate in war-torn Yemen

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Central bank floats exchange rate in war-torn Yemen

Yemen's internationally recognized central bank abandoned a peg of the war-torn country's currency to the dollar and ordered banks to use the market rate instead, effective Aug. 15, Reuters reported the same day, citing a circular issued a day earlier.

The Yemeni riyal had been pegged at 250 to the dollar, but Islamic and commercial banks have now been instructed to "use the exchange rate prevalent in the market for the U.S. dollar and other foreign currencies in accordance with the exchange rate lists issued by the central bank," the circular reportedly said. A new rate was not mentioned, but the riyal trades for around 350 to the dollar in the black market, traders told Reuters.

Yemen's internationally recognized government is based in the southern city of Aden. A coalition of Houthi-led rebels is based in the capital Sanaa, and the central bank there has not agreed to lift the currency peg, an official source told Reuters.

The official said most of the population lives in the northern part of the country and that lifting the peg could contribute to increases in the price of goods, which are mainly imported, and intensify economic hardship.