Yemen’s central bank reduced the interest rate on deposits by 2 percentage points to 18 percent, the state Saba news agency reported, citing Governor Mohamed Awad Bin Humam.
The rate cut followed a slowdown in inflation due to the stabilizing of the economy and an increase in foreign reserves, to $6.2 billion at the end of September from $4.5 billion at the end of last year, Saba said, without specifying the inflation rate.
Bin Humam said the interest rate is still very high compared to inflation and the rates on international markets, according to Saba. He said commercial banks had expected the reduction as “many citizens have faced problems in getting loans from banks,” which charge rates of as much as 27 percent.
Bin Humam said the central bank will continue to monitor banking developments in light of expectations that donors will start disbursing money they pledged at recent conferences in Riyadh and New York, which amounts to $7.9 billion in aid to support the country’s political transition.
Saudi Arabia made a $1 billion deposit in Yemen’s central bank last month in order to help stabilize the currency, which plunged last year during protests demanding the ouster of former President Ali Abdullah Saleh. The rial has now recovered to 214 per dollar from 250.
The last time Yemen’s central bank changed the deposit rate was in 2010, when it was increased from 15 percent.
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