Politics

Politicising Yemen’s currency: new Houthi notes part of a pattern

Far from being a technicality, the militia that controls much of Yemen’s west and north is using the rial and the physical expression of money to alter the state’s identity.

Khaled Abdullah/Reuters

Employees count bundles of Yemeni Riyal banknotes at the Central Bank of Yemen in Sanaa on January 7, 2020.

Politicising Yemen’s currency: new Houthi notes part of a pattern

Anwar Al-Ansi

last update on 26 Jul 2025

Barely a day goes by without Yemen’s Houthi group being in the news. Earlier this month, it attacked and sank two sea-going vessels. Then a naval interception revealed military and communications equipment bound for Houthi-controlled ports. Then, on 16 July, the militia unveiled a newly printed 200-rial banknote—meant to replace the older 250-rial denomination—which they began circulating in areas under their control, including the capital, Sanaa. Days earlier, the group issued a new 50-rial coin.

On the surface, the new notes seem sensible and necessary to replace vast quantities of deteriorated or worn-out bills, but the Houthis ensured that this purely technical act carried a far heavier political payload. The group is designated as a “foreign terrorist organisation” by the United States and several European countries, meaning that it is subject to a series of economic sanctions imposed by the US Treasury Department.

Two days before the Houthis released their newly printed-and-minted denominations, the Yemeni Central Bank—headquartered in the southern city of Aden, which is not under Houthi control—denounced the move as a “destructive and reckless act issued by an illegal entity,” adding that it was “a continuation of the economic warfare waged by the group to plunder the people’s resources and savings in order to fund its shadow networks with massive sums, absent any legal or monetary oversight”.

Economic fragmentation

The UN Special Envoy for Yemen, Hans Grundberg, described the Houthi initiative as a “unilateral measure,” arguing that it would not solve Yemen’s liquidity problems and could further destabilise the country’s already fragile economy and deepen the division of its monetary and institutional structures. It further contravenes the understandings reached on 23 July 2024 between the warring parties concerning economic de-escalation, he said, calling for a “coordinated approach that encourages dialogue, supports wider stability efforts, and seeks pragmatic solutions that benefit all Yemenis”.

New notes seem sensible to replace all the worn-out bills, but the Houthis ensured that this purely technical act carried a far heavier political payload

Economists and analysts have warned that accelerating economic fragmentation could effectively isolate the Houthi-controlled economy from the rest of the country. This separation, they argue, could become irreversible—particularly if it results in inflation or a devaluation of the rial within areas under Houthi control. Some living under Houthi rule responded with derision, arguing that currency swaps were meaningless in the absence of wages. Many have gone without salaries for more than seven years, and pensions have yet to be restored.

Central Bank of Yemen — A 200 Rial banknote. Critics say Yemen's currency is being politicised by the Houthis.

Several months ago, the Yemeni government floated the idea of changing the national currency as a pressure tactic against the Houthis, but withdrew the plan, likely concluding that it was both legally unsound and practically unfeasible during wartime. Decisions of this nature ideally need to be taken by an elected parliament and under stable, peacetime conditions.

All in the presentation

The Houthis presented the new notes and coins as a "bold gesture that has unsettled Sanaa's opponents," arguing that it marked an implicit declaration of a functioning state that manages its economy, protects its monetary sovereignty, and knows when to intervene decisively to stem financial erosion resulting from the blockade and years of aggression. Critics say this is an effort by the Houthis to burnish their image and elevate their stature.

The internationally recognised Yemeni government may respond by suspending letters of credit for hard currency that facilitate imports into Houthi-controlled regions. The group would then need to independently finance its imports without relying on banks operating in government-held areas. If economic exchange grinds to a halt, however, it is impoverished Yemeni citizens who will bear the brunt.

Mohammed Huwais/AFP — An employee of Yemen's Central Bank in the Houthi-controlled capital, Sanaa, on June 23, 2021.

Suspicions abound as to the technicalities of printing banknotes, which is among the more complex and security-sensitive operations in modern economies, requiring advanced technology and specialist ink. This has fuelled speculation that the Houthis have had foreign assistance. Unverified reports suggest the involvement of Reza Heidari, an Iranian businessman sanctioned by the US since 2017 for involvement in currency counterfeiting for Iran's Quds Force.

A parallel economy

For years, the Houthis have sought to build a war economy parallel to the one operating under the Yemeni government's oversight. A report by the UN Panel of Experts noted that the Houthis generate informal revenues from levies and zakat (religious donations) estimated at more than $1.8bn, with other revenue from companies and institutions that benefit senior Houthi leaders.

For years, the Houthis have sought to build a war economy parallel to the one operating under the Yemeni government's oversight

The Houthis claim to have successfully stabilised the exchange rate of the old rial, unlike the Central Bank in Aden. Others say this is not due to sound financial policy but to declining or stagnant money supply in Houthi areas. In contrast, government areas have witnessed an expansion in monetary circulation driven by deficit spending and unbacked currency printing. In both scenarios, inflation and price volatility have prevailed, casting long shadows over already struggling households.

Historically, Yemeni banknotes have adhered to strict design protocols, incorporating non-controversial symbols drawn from the country's ancient civilisations, deliberately excluding modern political figures to avoid inflaming political sensitivities. The Houthis opted to include Islamic symbols—most notably, Al-Janad Mosque in Taiz and Al-Aidarous Mosque in Aden.

Critics say the inclusion of sectarian and genealogical imagery tied to the group's ideological lineage reflects a broader Houthi project—an ongoing effort to reshape the Yemeni state's identity, one that includes overhauling educational curricula and renaming streets. In other words, these are not 'just' new banknotes and coins. They are part of an effort to recast the very form and concept of the nation.

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