See discussions, stats, and author profiles for this publication at: https://www.researchgate.

net/publication/376079615

Inflation in Yemen: A Threat to Stability and Development

Article · December 2023

CITATIONS READS
0 116

1 author:

Ramzi Abdullah Ahmed Hassan

Islamic university in Madinah
8 PUBLICATIONS 0 CITATIONS

SEE PROFILE

All content following this page was uploaded by Ramzi Abdullah Ahmed Hassan on 01 December 2023.

The user has requested enhancement of the downloaded file.

 ISSN: 2690-0688

Research Article Journal of Humanities & Social Sciences

Inflation in Yemen: A Threat to Stability and Development

Ramzi Abdullah Ahmed Hassan*

Swami Ramanand Teerth Marathwada University, Nanded City,

Maharashtra, India. *
Corresponding Author
Ramzi Abdullah Ahmed Hassan, Ph.D. Research Student, Swami Ramanand
Teerth Marathwada University, Nanded City, Maharashtra, India.
Submitted: 2023, Aug 27; Accepted:2023, Sep 29: Published: 2023, Oct 31

Citation: Hassan, R. A. A. (2023). Inflation in Yemen: A Threat to Stability and Development. J Huma Soci Scie, 6(9), 312-321.

Abstract
This research study looks at the causes and consequences of inflation in Yemen, with a particular emphasis on the
economic variables that contribute to inflationary pressures and the efficacy of strategic efforts in limiting their influence.
The research takes a comprehensive approach, including both qualitative and quantitative approaches. A thorough
examination of the current literature on inflation in Yemen is carried out in order to identify important economic variables
driving inflation trends. In addition, case studies of strategic initiatives conducted by policymakers and international
organizations are reviewed to assess their effectiveness in reducing inflation. The study's findings highlight numerous
crucial economic elements that are fuelling Yemen's inflation. Notably, price controls, targeted subsidies, and other
strategic interventions, such as monetary policy adjustments, have been shown to be beneficial in decreasing inflationary
pressures. Furthermore, the study emphasizes the importance of political stability, foreign help, and structural reforms
in strengthening Yemen's economy and its capacity to sustain stable pricing over time. Furthermore, examining strategic
interventions improves comprehension of their efficiency in combatting inflation, while a full assessment of economic
variables gives light on the underlying causes of inflation in Yemen.

Keywords: Inflation, Monetary Policy, Yemen, Economic Stability

1. Introduction
Inflation is one of the major issues affecting an economy's strength
or weakness economically. We're talking about inflation today
because it's a major barrier to investment and growth in the
Republic of Yemen. Yemen is one of these undeveloped nations,
although inflation is a potential issue in all nations, including rich
nations. The difference is in the inflation rate and how it affects
many facets of life. The following are some broad guidelines and
requirements for controlling the economic environment:
• All goods and services should be subject to the price hike, not just
a select few. Although the expansion or scarcity of raw resources
may have caused specific prices to rise, inflation is the general
level of prices.
• The minor price increase is a normal outcome of competitiveness
and should have a minimum proportion of more than 5%. However,
it is regarded as real inflation if it rises above the preinflation rate.
• The rise ought to last for a very long time. This naturally
eliminates variations and seasonal changes, such as the availability
of certain fruits and changes in commerce.
The study of recent events and developments has shown the fact,
J Huma Soci Scie, 2023
which is that the problem of inflation hurts society and its families.
This is so because rising prices impact wages and salaries, which
frequently causes manufacturing to stop. Examples include worker
strikes and educational disruption brought on by the demise of the
local currency and financial system. The issue has gotten worse
over the previous ten years, with inflation reaching a point that has
divided society, with some people being able to take advantage of
every opportunity to become wealthy while others were struggling
to make ends meet. Recent years have seen a lot of discussion on
how dealers' withdrawals of hard cash from the exchange market
affect inflation. Capital flight, often known as traders leaving for
hard cash, may greatly influence a nation's economy and capacity
to manage inflation. The availability of circulating currency is
one of the primary causes of inflation. Prices often increase and
inflation results when money is scarce in circulation [1]. The acts
of traders here play a role. Hard currency withdrawals by traders
from the exchange market are effectively money removals. As a
result, less money may be available, resulting in higher pricing.
As a result, inflation may increase, making it more challenging
for the government to stabilise and regulate the economy [2]. The
exchange rate is another effect of merchants removing hard cash
Volume 6 | Issue 9 | 312
from the exchange market. Hard money might lose value when
dealers withdraw it because they also demand local currency. This
might increase inflation, making it harder for the government to
manage and regulate the economy. Governments must acknowledge
this influence and act to lessen it. These measures can involve
putting legislation to stop capital flight or incentivising traders to
maintain their cash in the local economy. Governments should also
concentrate on fostering an atmosphere that encourages businesses
and investors to remain and invest in their nation. Inflation in
Yemen was mainly brought on by currency depreciation. This is
due to a number of factors:
• Political Unrest: Yemen has experienced political unrest for
several years due to recurrent wars and the absence of a strong
central authority. As a result, investors lost faith in the economy,
which in turn caused them to withdraw capital, lowering the value
of the local currency.
• Depletion of Foreign Reserves: Due to the problems above,
Yemen's foreign exchange reserves have shrunk, making it
difficult for the government to support the local currency. The
value of the currency decreased as a result, of increasing inflation.
Yemen's inflation has risen significantly as a result of currency
depreciation. Living expenditures are growing, making it harder
and harder for people to satisfy their basic needs. Additionally,
the local currency's dropping value made it harder for businesses
to import products, which resulted in shortages and increased
pricing. It also allowed buyers to spend the same amount on fewer
items by lowering their purchasing power. Additionally, it can
lead to a decline in people's real incomes, which might lead to a
deterioration in living conditions.
2. Research Objective
• The research aims to achieve several objectives, including:
• Conducting a thorough examination of Yemen's inflation issue
and comprehending how inflation has changed.
• Gathering and interpreting statistical data on Yemen's broad use
of electronic payment systems.
• Emphasising the need to work towards monetary policy.
2.1 Research Hypothesis
Hypothesis 1: Yemen's money supply (M2) increased significantly
between 2011 and 2021.
Hypothesis 2: M1 and M2's mean values differ greatly.
Hypothesis 3: The monetary base, the currency issued, and the
reserve held by the central bank all have significantly different
mean values.
Hypothesis 4: Between 2011 and 2021, there were considerable
fluctuations in the value of the Yemeni Rial about the dollar.
2.2 Literature Review
Al-Qatbari used multiple linear regression analysis using E-Views
to analyse macroeconomic performance indicators in Yemen
during the study period [3]. The study aimed to identify the
impact of some macroeconomic variables on economic growth in
Yemen, to analyse the concept of war economy and its impact on
the spread of economic corruption in Yemen, and to provide some
J Huma Soci Scie, 2023
recommendations that help to improve the performance of those
variables to be positive impact on the Yemeni economy. The study
found that the crises and wars that the Yemeni economy faced
during the study period harmed economic growth and that the
inflation rate hurt the gross domestic product. The study also found
that spreading economic corruption in Yemen negatively impacted
economic growth and trust in the government and government
institutions. The study also showed an urgent need to improve
Yemen's economic performance by improving macroeconomic
variables such as investment, foreign trade, education, and
technology. Based on the study's findings, Al-Qatbari recommends
improving the economic performance in Yemen by improving
some macroeconomic variables, improving the investment climate
and encouraging foreign investment, improving the quality of
education and providing job opportunities for youth, improving
infrastructure and developing national industries. The researchers
also recommend combatting economic corruption and improving
transparency and governance in the government and government
institutions. The study by Al-Qatbari is a valuable contribution
to the literature on the economic performance of Yemen [3]. The
study provides a comprehensive analysis of the factors that have
affected the Yemeni economy in recent years, and it offers several
recommendations for improving economic performance in the
future.
An extensive analysis by Ba-Omer offers a profound grasp of the
origins, repercussions, and suggestions for enhancing Yemen's
economic position. According to the report, Yemen's economic
development is negatively impacted by the Republic of Yemen's
foreign debt in a variety of ways, including A reduction in the
state's financial resources that could otherwise be utilised for
development: The external debt load forces the government to make
monthly payments on the principle and interest, which can cause
the state's financial resources to be reduced. Increased reliance on
imports: The weight of the government's foreign debt may force it to
import goods and services that it cannot manufacture domestically.
A trade deficit and employment losses in the domestic economy
may result. Rising inflation: The weight of foreign debt can also
cause inflation to rise since the government may need to generate
additional currency to pay off its debts. As a result, the standard
of life may deteriorate, and earnings and salaries may have less
buying power. The study also offered some recommendations
to help Yemen's economy, including: refraining from borrowing
money from abroad unless necessary; the government should only
borrow money from abroad when necessary, and it should ensure
that the money is put to productive use to advance the country's
economy.
This literature review focuses on the definition, causes, and
types of inflation in general, specifically emphasising its effects
on Yemeni society, particularly the youth, and the subsequent
implications on the country's economic, social, and developmental
aspects. The study aims to shed light on the challenges faced
by the young population in Yemen due to inflation and identify
potential solutions to alleviate their hardships. The study explores
Volume 6 | Issue 9 | 313
how inflation harms Yemeni youth, concentrating on how it affects
their quality of life overall, economic well-being, and health.
Young people are finding it harder to satisfy their basic necessities
due to inflation's constant rise in the cost of necessary goods and
services, which has increased poverty and financial instability
among this group. This literature study is significant because it
is the first to investigate how inflation affects Yemeni adolescents
and focuses on a group frequently ignored in economic studies.
The study intends to contribute to creating targeted policies that
can enhance young people's economic and social well-being by
providing light on the difficulties they encounter. The researcher
suggests some approaches to deal with the problems that Yemeni
youth are experiencing due to inflation. First and foremost, the
government must perform thorough socioeconomic analyses and
research to determine if salaries and pensions are enough for
addressing individuals' material and spiritual requirements. Such
studies can help guide judgements about raising young people's
living standards.
3. Stages of Inflation in The Republic of Yemen
The Republic of Yemen has seen tumultuous phases of disruption
and succeeding political crises that have impacted all facets of the
economy and exacerbated misery in several Yemeni regions. There
is no prospect for a future resolution to the crisis, and the daily
misery continues. Although it is hard to identify the exact time
when the currency collapsed, gathering and analysing information
from the major sources is feasible. One of the activities that
contributed to greater suffering was the Central Bank of Yemen's
in Aden's decision to publicise the dollar exchange rate, which
economists considered as a dereliction of duty at a time when
people should be helping them and sticking by them through
problems. On the black market, the average exchange rate of the
Yemeni riyal to the US dollar in December 2021 was (1255.26)
riyals, a significant increase from the rate of (792.69) riyals to
the dollar at the end of December (2020). In November (2021),
the price jumped from (1500.60) riyals to the dollar. To address
the instability in the foreign exchange market, the Central Bank
of Yemen implemented some measures and reforms. These
included the creation of a weekly auction process for the selling of
currencies through an electronic platform, stricter control over the
flow of foreign currencies, and fines for infractions. The Republic
of Yemen has had some difficult periods characterised by political
turmoil and escalating crises that have influenced all elements of
the economy and heightened suffering in many Yemeni regions.
Despite the lack of a defined schedule for the devaluation of
the currency, the situation may be understood by analysing the
data that is now accessible. Aden-based Central Bank of Yemen
adopted a decision to modify the value of the US dollar, which
experts have criticised as an abdication of duty at a time when
people need help and support to deal with challenges. Compared
to the average exchange rate of 792.69 riyals for every dollar at
the end of December 2020 and 1500.60 riyals for every dollar in
November 2021, the Yemeni riyal's value versus the US dollar as
of December 2021 was 1255.26 riyals for every dollar.
J Huma Soci Scie, 2023
The Central Bank of Yemen undertook actions and changes, such
as introducing a weekly foreign currency auction system via an
electronic platform and adopting a flexible exchange rate system
to alleviate instability in the foreign exchange market. During the
auction period, the Central Bank received offers totaling $135
million, with a total bid value of ($102.3) million, or (75.8%)
of the total bid value. The sum allotted to successful bids at the
end of December 2021 was ($100.3) million. The Central Bank
might absorb 120.9 billion Yemeni riyals through these operations,
equal to (22.3%) of the increase in the monetary base by the end
of December 2021. The minimum interest rate on loans has also
remained at 15% thanks to the Central Bank's rate cut in February
2013. Banks still choose the loan interest rate based on their
operational requirements. The primary objective of monetary
policy, by Central Bank of Yemen Law No. 14 of 2000, is to achieve
and maintain price stability. To create and implement an effective
monetary policy that is driven by broad economic goals upholds the
currency's strength, and ensures appropriate financing to achieve
overall financial balance, the Central Bank has made significant
efforts to collaborate with considerable government agencies. The
Republic of Yemen's cost of living index for food increased due
to inflation, rising from (47,248) in December 2020 to (84,708)
in November 2021 and (73,607) in December 2021. This is due to
a monthly inflation rate for food of 13.1% in December 2021 and
an annual inflation rate of roughly (55.8%) from December 2020
to December 2021. The inability to get correct data in the Yemeni
Republic was one of the major challenges; as a result, research
institutions had to use time tracking techniques to study economic
advances year after year, which impacted the reliability and quality
of data. Ten years ago, for instance, there were( 250 YER) for
every dollar.
Despite this, the exchange rate for today is (1010 YER) to (1 USD)
due to the current situation and political upheaval. 2020 witnessed
a significant decline in the currency's value before briefly
recovering, with the exchange rate dropping from (250YER) to
(120 SR). This inflation is substantial and unpredictable [4].
Due to this sudden and unfathomable drop, many currency traders
have threatened to file for bankruptcy if the markets do not recover
swiftly. The inflation issue has now collapsed, necessitating
international involvement to contain the scope of the catastrophe.
If the currency fails, the system for leading a respectable life
also fails, and high crime rates spread. The Yemeni government
frequently issued money without any support, which caused it
to devalue. Repeating this practice would lead to the currency's
eventual demise and would be bad for the production of money.
• The government printed (8 billion YER) from July to September
2012.
• To try to stop the currency's collapse in June (2021), the
government produced (400 billion YER) from the most recent
printing.
• The final delivery of seven containers of paper money came on
December 20, 2018.
• The Central Bank of Yemen in Aden got $665 million from the
Volume 6 | Issue 9 | 314
 3)3)3)The
The
The final
final
final delivery
delivery ofofof
delivery seven
seven
seven containers
ofofof
containers
containers paper
paper
paper money
money
money came
came
came on
onon December
December
December 20,
20,
20, 2018.
2018.
2018.
4)4)4)The The
The Central
Central
Central Bank
Bank
Bank ofofof Yemen
Yemen
Yemen ininin Aden
Aden
Aden got
got
got $665
$665
$665 million
million
million from
from
from the the
the IMF
IMF
IMF account
account
account on
onon August
August
August 25,
25,
25, 2021,
2021,
2021,
tototo help
help
help with
with
with external
external
external foreign
foreign
foreign currency
currency
currency funding.
funding.
funding. (Studies
(Studies
(Studies T.T.T. E.,
E.,
E., 2017)
2017)
2017) (KP,
(KP,
(KP, 2017)
2017)
2017)
IMF account on August 25, 2021, to help with external foreign
currency funding [5,6].
4.4.4.Data
Data
Data analysis
analysis
analysis
4. DataTable
Analysis
Table
Table " "M1
1:1:"1:M1 M1 and
and
and M2 M2
M2 ofYemen's
Yemen's
ofofYemen's monetary
monetary
monetary supply
supply
supply from
from
from 2011
2011
2011 to2021"
2021"
toto2021"

Terms/
Terms/
Terms/
Years
Years
Years 2011 2012
2011
2011 2012 2013
2012 2013 2014
2013 2014 2015
2014 2015 2016
2015 2016 2017
2016 2017 2018
2017 2018 2019
2018 2019 2020
2019 2020 2021
2020 2021
2021
M2M2
M2 2268.2 2756.8
2268.2 2756.8
2268.2 3101.6
2756.8 3101.6 3106.2
3101.6 3106.2 3238.9
3106.2 3238.9 3697.5
3238.9 3697.5 4282.3
3697.5 4282.3 5504.2
4282.3 5504.2 5973.7
5504.2 5973.7
5973.7 67016701 7229.1
6701 7229.1
7229.1
M1M1
M1 993
993 1104.8
1104.8 1116.6
1116.6 1129.5
1129.5 1502.4
1502.4 1789.6
1789.6
993 1104.8 1116.6 1129.5 1502.4 1789.6 2316.5 2316.5
2316.5 3084
3084 3411.1
3411.1 4035.9
4035.9 4479.3
4479.3
3084 3411.1 4035.9 4479.3
Source:
Source:
Source: Monetary
Monetary
Monetary and
and
and financial
financial
financial developments,
developments,
developments, December
December
December 2021,
2021,
2021, General
General
General Administration
Administration
Administration ofofof Research
Research
Research and
and
and
Statistics,
Statistics,
Statistics, Central
Central
Central Bank
Bank
Bank ofofof Yemen
Yemen
Yemen -Aden
Aden
- -Aden - --
The
The
The table
table
table shows
shows
shows the
the
the values
Table
values
values 1: for
M1
for
for M2,
and
M2,
M2, M1M1
M2
M1 offrom
from
from 2011
Yemen's
2011
2011 toto 2021.
toMonetary
2021.
2021. Cash
Supply
Cash
Cash and
and
and bank
from
bank
bank deposits
2011 to 2021
deposits
deposits are
are
are included
included
included ininin M2,
M2,
M2,
representing
representing
representing
The table thethe
the
shows the values total
total
total
for amount
amount
amount
M2, M1 ofofof money
money
money
from circulating
tocirculating
2011 circulating ininin
2021. Cash an
anan economy.
economy.
economy.
an economy's M1,M1,
M1, which
which
which
entire excludes
excludes
excludes
amount time
of money. time
time deposits
deposits
deposits
With but 7229.1
but
but
M2 reaching
and bankincludes
deposits cash
are included
and in M2,
checking representing
deposits, the total
represents an and M1 reaching
economy's entire 4479.3ofinmoney.
amount 2021, respectively,
With M2 the table shows
reaching
includes cash and checking deposits, represents anan economy's entire amount ofofmoney.
money.WithWith M2 reaching
amountincludes
of moneycash and checking
circulating deposits,
in an economy. represents
M1, economy's
which excludes how M2 entire amount
and M1 have risen steadily. M2 reaching
7229.1
7229.1
time deposits
7229.1 but
andand
and M1
M1
includes
M1 reaching
reaching
cash and
reaching 4479.3
4479.3 ininin
checking
4479.3 2021,
2021,
deposits,
2021, respectively,
respectively,
represents the
respectively, the
the table
table
table shows
shows
shows how
how
how M2
M2
M2 and
and
and M1 M1
M1 have
have
have risen
risen
risen steadily.
steadily.
steadily.

Graph
Graph
Graph 1:1:1: Terms
Terms
Terms From
From
From 2011-2018
2011-2018
2011-2018
6000
6000
6000

5000
5000
5000

4000
4000
4000

3000
3000
3000

2000
2000
2000

1000
1000
1000

0 00
2011
2011
2011 2012
2012
2012 2013
2013
2013 2014
2014
2014 2015
2015
2015 2016
2016
2016 2017
2017
2017 2018
2018
2018

MM2M22 MM1M11

Graph 1: Terms From 2011-2018

Table
Table
Table “Yemen’s
2:“Yemen’s
2:2:“Yemen’s Monetary
Monetary
Monetary Base,
Base,
Base, Issued
Issued
Issued Currency,
Currency,
Currency, andand
and Reserve
Reserve
Reserve with
with
with the
the
the Central
Central
Central Bank:
Bank:
Bank: 2011-2021”
2011-2021”
2011-2021”

Terms
Terms
Terms / Years 2011
/ Years
/ Years 2011 2012
2011 2012 2013
2012 2013 2014
2013 2014 2015
2014 2015 2016
2015 2016 2017
2016 2017 2018
2017 2018 2019
2018 2019 2020
2019 2020 2021
2020 2021
2021
MB
MB
MB 954.5 1077.5
954.5 1077.5
954.5 1097.6
1077.5 1097.6 1112.8
1097.6 1112.8 1452.7
1112.8 1452.7 1795.9
1452.7 1795.9 2435.8
1795.9 2435.8 3125.9
2435.8 3125.9 3484.7
3125.9 3484.7 3948.1
3484.7 3948.1 4490.7
3948.1 4490.7
4490.7
IC
ICIC 800.3 832.7
800.3
800.3 832.7 821.6
832.7 821.6 854.9
821.6 854.91099.5
854.9 1099.51375.8
1099.5 1375.81893.8
1375.8 1893.82571.6
1893.8 2571.62890.5
2571.6 2890.53327.5
2890.5 3327.53802.7
3327.5 3802.7
3802.7
C.B.R
C.B.R
• •• C.B.R
154.2 244.8
154.2
154.2 244.8 6.127
244.8 6.127 257.9
6.127 257.9 353.2
257.9 353.2 420.2
353.2 420.2 549.3
420.2 549.3 554.3
549.3 554.3 594.2
554.3 594.2 620.6
594.2 620.6
620.6 688
688
688
Source:Monetary
Source:
Source: Monetaryand
Monetary andfinancial
and financialdevelopments,
financial developments,December
developments, December2021,
December 2021,General
2021, GeneralAdministration
General Administrationofofof
Administration
Research and
Researchand
Research Statistics,
andStatistics, Central
Statistics,Central Bank
CentralBank of Yemen
BankofofYemen – Aden
Yemen––Aden
Aden–––
Table 2: Yemen’s Monetary Base, Issued Currency, and Reserve with the Central Bank: 2011-2021

J Huma Soci Scie, 2023 Volume 6 | Issue 9 | 315

 respectively. The maximum values for MB, IC, and C.B.R are (4490.7, 3802.7) and (688) respectively. The
difference between any variable's highest and minimum values is its range. The first quartile is subtracted
from the third quartile to obtain the interquartile range, representing the middle 50% of the data. The value
that appears in the centre of the data when it is ordered from least to greatest is the median value for each
According to the descriptive data, the mean values for MB, IC, and from the third quartile to obtain the interquartile range, representing
variable. Overall, the descriptive data reveals that MB, IC, and C.B.R. values are very variable. This
C.B.R. are (636.33, 800.3) and (154.2) respectively. The data has the middle 50% of the data. The value that appears in the center
a lot of variance, as shown
volatility by be
might thecaused
standard
bydeviations, which areincluding
various variables, of the data when it is ordered
modifications to the from least tomonetary
economy, greatest ispolicy,
the median
also generally large for each variable. The minimal values for MB, value for each variable. Overall, the descriptive data reveals that
IC, and C.B.R or are
activity on 800.3)
(154.2, the financial markets.
and (6.127), respectively. The MB, IC, and C.B.R. values are very variable. This volatility might
maximum values for MB, IC, and C.B.R are (4490.7, 3802.7) and be caused by various variables, including modifications to the
(688) respectively. The difference between any variable's highest economy, monetary policy, or activity on the financial markets.
and minimum values is its range. The first quartile is subtracted
Graph 2: Three Terms From 2011-2018
3500

3000

2500

2000 Monetary base

issued currency
1500
reserve with the central bank
1000

500

0
2011 2012 2013 2014 2015 2016 2017 2018

Graph Rial
Figure 1: “Yemeni 2: Three TermsRate
Exchange From 2011-2018 2011-2021”
Fluctuations:

Jan 21.3.80 Dec 21.3.91

1255.26
787.39

792.69
645.29

601
536

499.5
477.5

444.65
315.64

250.25
214.89

214.89

214.89

214.89
214.89

214.89

214.89

214.89
213.8

2021 2020 2019 2018 2017 2016 2015 2014 2013 2012

Source: Monetary and financial developments, December 2021, General Administration of Research and
Statistics, Central Bank of Yemen - Aden -
Between 2011 andFigure 1: average
2021, the Yemeniexchange
Rial Exchange Rate
rate of the Fluctuations:
Yemeni 2011-2021
Rial (YER) was (213.8 YER/USD). The
data showed a considerable amount of variance since the exchange rate's standard deviation was (94.7
YER/USD). In April 2014, the currency rate was (250.25 YER) to one US dollar, and in November 2020,
J Huma Soci Scie, 2023 Volume 6 | Issue 9 | 316
it was (1500.6 YER) to one US dollar. The (1250.35 YER/USD) exchange rate range shows large
fluctuations in the currency rate over the period. The middle 50% of the data was quite close together, as
seen by the interquartile exchange rate range of (103.25 YER/USD). Half of the data points were above this
Between 2011 and 2021, the average exchange rate of the Yemeni YER/USD) while the standard deviation was (94.7 YER/USD).
Rial (YER) was (213.8 YER/USD). The data showed a considerable In April 2014, the currency rate was ( 250.25 YER) to one USD,
amount of variance since the exchange rate's standard deviation and in November 2020, it was (1500.6 YER) to one USD. The
was (94.7 YER/USD). In April 2014, the currency rate was (250.25 (1250.35 YER/USD) exchange rate range shows large fluctuations
YER)including
to one US Yemen's protracted
dollar, and civil conflict,
in November 2020, it reliance on oil exports,
was (1500.6 and therate
in the currency weakening USD currency,
over the period. The middlemight
50% of the data
YER) to one US dollar. The (1250.35 YER/USD) exchange rate was quite close together, as seen by the interquartile exchange rate
rangebe to blame
shows for this volatility.
large fluctuations in the currency rate over the period. range of (103.25 YER/USD). Half of the data points were above
The middle 50% of the data was quite close together, as seen by this figure and half were below it, according to the median exchange
including
the interquartile Yemen's
exchange protracted
rate range of (103.25 Table
civil YER/USD).
conflict, 3: T.ontest
reliance
Half oil exports,
rate andYER/USD).
of (214.89 the weakening USD
Based on currency,
these facts,might
the Yemeni Rial
including Yemen's protracted civil conflict, reliance on oil exports, and the weakening USD currency, might
of the data points were above this figure
be to blame for this volatility. and half were below it, exchange rate appears to be unstable and unpredictable. Various
be to blame
according to the for this volatility.
median exchange rate of (214.89 YER/USD). variables, including Yemen's protracted civil conflict, reliance on
The descriptive study reveals that the Yemeni Rial exchange rate oilValue
Statistic exports, and the weakening USD currency, might be to blame
Table 3: T. test
varied substantially between 2011 and 2021. The data showed a for
Table 3: T. test-7.299this volatility.
large amount of fluctuation; the mean exchangeTest rateStatistic
was (213.8
p-value
Statistic 0.000
Value
Statistic
Number Value 4
TestofStatistic
lags -7.299
Test Statistic
p-value
Critical value (1%) -7.299
0.000
-3.441
p-valueNumber of lags 0.000
Critical value (5%) -2.861 4
Number
Critical of lags
Critical
value value
(10%) 4
(1%)-2.576
-3.441
CriticalCritical
value value
(1%) (5%)
-3.441
-2.861
CriticalCritical
value value
(5%) (10%)
-2.861
-2.576

Graph 3: Market Exchange Rates

Critical (Yemeni
value (10%) riyal/
-2.576Dollar) From 2011-2021
1600
Table 3: T. Test
Graph 3: Market Exchange Rates (Yemeni riyal/ Dollar) From 2011-2021
1400
1200 1600
Graph 3: Market Exchange Rates (Yemeni riyal/ Dollar) From 2011-2021
1400
1000
1600
8001200
1400
1000
600
1200800
400
1000600
200
800400
0
600200
21.3.91

21.3.90

21.3.89

21.3.88

21.3.87

21.3.86

21.3.85

21.3.84

21.3.83

21.3.82

21.3.81

21.3.80

4000
21.3.91

21.3.89 21.3.90

21.3.88 21.3.89

21.3.87 21.3.88

21.3.86 21.3.87

21.3.85 21.3.86

21.3.84 21.3.85

21.3.84

21.3.83

21.3.82

21.3.81

21.3.80

200
Dec Nov Oct Sep Aug Jul Jun May Apr Mar Feb Jan
0
21.3.91

21.3.90

21.3.83

21.3.82

21.3.81

21.3.80

2012
Dec 2013
Nov 2014 Sep2015Aug 2016
Oct Jul 2017 2018 Apr 2019
Jun May Mar 2020
Feb 2021
Jan

2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Dec Nov Oct Sep Aug Jul Jun May Apr Mar Feb Jan
Graph 3: Market Exchange Rates (Yemeni riyal/ Dollar) From 2011-2021
Table 4:Group Statistics
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
Table 4:Group Statistics
Std. Std. Error
Term N Mean Std.
Deviation Std. Error
Mean
Table 4:Group Statistics Term
M1 11N 4350.86
Mean Deviation
1715.447 Mean
517.227
M2 M1 11 4350.86
11 2269.34 1715.447 517.227
1280.850 Std. 386.191
Std. Error
M2 11 2269.34 1280.850 386.191
Term N Table 4:Group
Mean Statistics
Deviation Mean
J Huma Soci Scie, 2023 M1 11 4350.86 1715.447 517.227 Volume 6 | Issue 9 | 317
M2 11 2269.34 1280.850 386.191
 standard deviation,
and an standardFor
SD of 1280.850. error mean,
term M2, and total observations
the standard error mean(N) for eachThis
is 386.191. term.shows
Therethat
arethe
11data
observations for term
for word M1 M1,
is more withand
varied a mean of 4350.86
dispersed and
than that foranterm
SDM2,
of 1715.447.
according For term
to the M1, the
data.
standard error mean is 517.227. There are 11 observations for term M2, with a mean of 2269.34
Table 5: Independent Samples Test M1, M2
and anforSD
The test results theofdata
1280.850. Fordisplayed
analysis are term M2, forthe standard
"M1" and areerror mean is 386.191.
11 observations for termThis shows
M2, with that of
a mean the2269.34
data and an
"M2." The table includes the mean, standard deviation, standard SD95% of 1280.850. For
Confidence term M2, the standard
the Difference is 386.191.
Intervaltoofthe error mean
forand
error mean, wordtotalM1 is more (N)
observations varied andterm.
for each dispersed than
There are 11 that forshows
This term M2,
that theaccording
data for word M1 isdata.
more varied and dispersed
observations for term Mean
M1, withDifference Std. Error
a mean of 4350.86 Difference
and an SD of than that forLower
term M2, according to the Upper
data.
1715.447.Table
For term
5: Independent 2081.527
M1, the standard error mean
Samples Test is
M1, M2 645.497
517.227. There 735.043 3428.011
2081.527 645.497 728.042 3435.013
95% Confidence Interval of the Difference
Mean Difference Std. Error Difference Lower Upper
The table below displays the outcomes of an example test comparing the M1 and M2 groups. The
2081.527 645.497 735.043 3428.011
standard error difference is 645.497, while the average difference between the two groups is
2081.527 645.497 728.042 3435.013
2081.527. The difference's 95% confidence interval range is from 735.043 to 3428.011. Since M1
Table 5: Independent Samples Test M1, M2
The tableThe table
has
below below the
adisplays
greater displays
mean the outcomes
value
outcomes than
of anM2, itofisanevident
example example
test thattest
thecomparing
2081.527. groupsthe
twodifference's
The M1 confidence
differ
95% and M2 groups.
significantly. The is from
interval range
comparing the M1 and M2 groups. The standard error difference 735.043 to 3428.011. Since M1 has a greater mean value than M2,
standard
is 645.497, while
error
the 6:
difference
average difference
is 645.497,
betweenofthe
while the average difference between the two groups is
two groups is it is evident that the two groups differ significantly.
Table Test of Homogeneity Variances
2081.527. The difference's 95% confidence interval range is from 735.043 to 3428.011. Since M1
has aTerms
greater mean value Method
than M2, it is evident Levene
that Statistic
the two groups df1differ significantly.
df2 Sig.
Based on Mean: 14.581 2 30 .000
Monetary base Basedofon Median: 6.004 2 30 .006
Table 6: Test of Homogeneity Variances
issued currency
Based on the 6.004 2 20.294 009
Terms Reserve with the Method Levene Statistic df1 df2 Sig.
central bank Median and with
Based on Mean:
adjusted “df” 14.581 2 30 .000
Monetary base Based on Median: 6.004 2 2 30 30.006000
Based on trimmed 13.792
issued currency
Based on the
“mean.” 6.004 2 20.294 009
Reserve with the
central bank Median andTable with6: Test of Homogeneity of Variances
considerably in each of the
adjusted four approaches. This indicates that variations in the monetary base,
“df”homogeneity
The results of a test
The results of a test of the homogeneity
of the
of trimmed
of variances for
variances for the three13.792
the three variables of the monetary base,
the currency that has Based
beenon issued, and the centralvariances
bank's of the2 three terms
reserves do not30vary considerably
000consistently
differ in each of the four
or
variables of theissued
monetary base, issued
money, and money,
reserveandwith
reserve
thewith the approaches.
central bank are This shown indicates
in thethattable
variations in theFour
below. monetary base, the
distinct
central bank in the “mean.”
clearly. This can point to a problem with the data or a mistake in how the three components were do not
are shown table below. Four distinct approaches currency that has been issued, and the central bank's reserves
were employed approaches were
to conduct the test:employed
the Levene to conduct
statistic basedtheon test: theconsistently
differ Levene statistic
or clearly.based
This canonpoint
mean, to a the Levene
problem with the
mean, thedistributed. Tobased
Levene statistic determine the reason
on the median, the Levene forstatistic
these variations,
data or a mistakesubstantial
in how theinvestigation
three components would be
were distributed. To
Themedian
based on the results
andof
statistic a test
based
with onofthe
modified the homogeneity
median,
degrees of freedom, ofandvariances
the Levene statistic
the for
based
determine the three
theon thevariables
reason median of the
for these and withmonetary
variations, modified base,
substantial degrees
investigation
required.
Levene statistic
ofbased
issued on theand
money,
freedom, trimmed
themean.
and reserve
Levene When
with the significance
the
statisticcentral
basedbankon would
theare be required.
shown
trimmed in theWhen
mean. table thebelow. Four distinct
significance threshold
thresholdTable
(Sig.)7:
is less
ANOVAthan 0.05,
Testthe findings demonstrate that the
approaches
(Sig.) iswere
less employed
than 0.05,tothe
conduct the demonstrate
findings test: the Levene
that statistic based on
the variances of mean, the Levene
the three terms vary
Sum of
statistic based on the median, the Levene statistic based on the median and with modified degrees
Source: “Squares” df Mean Square F Sig.
of freedom, and the Levene statistic
Between Groups: 21039004.538 based on the trimmed mean.
2 10519502.269 When the
10.593significance
.000 threshold
(Sig.) isWithin
less than 0.05, the
Groups: findings demonstrate
29793196.724 30 that the variances
993106.557 -- -- three terms vary
of the
Total= 50832201.261 32 - - -

Table 7: ANOVA Test

This ANOVA test will demonstrate any significant differences between the means of three or more
This ANOVA test will demonstrate any significant differences level is 000. The "Within Groups" source has 30 degrees of
betweengroups.
the meansThe "Between
of three Groups"
or more groups. Thesource
"Between hasGroups"
a mean square
freedom,ofa (10519502.269), a degree of freedom
sum of squares of 29793196.724, and a mean square
source has a mean square of (10519502.269), a degree of freedom of (993106.557). The degree of freedom and number of squares
of a2,total
of 2, and and of
a total of (21039004.538)
(21039004.538) squares,toaccording
squares, according to "total"
the for the the information
source are 32inand
the50832201.261,
table. The Frespectively.
value The
information in the table. The F value is 10.593, there is a significant variation among groups is also quite low, suggesting that there is
is 10.593, there is a significant difference between the group averages, and the significance level
difference between the group averages, and the significance likely a significant difference between the groups.
is 000.
J Huma Soci Scie, The
2023 "Within Groups" source has 30 degrees of freedom, a sum of squares of 29793196.724,
Volume 6 | Issue 9 | 318

and a mean square of (993106.557). The degree of freedom and number of squares for the "total"
source are 32 and 50832201.261, respectively. The variation among groups is also quite low,
 source are 32 and 50832201.261, respectively. The variation among groups is also quite low,
suggesting that there is likely a significant difference between the groups.

Table 8: Multiple Comparisons by Dunnett T3

With a standard error of 395.65528, the mean difference between the monetary base and reserves
held by the
(I) central bank is 1866.67027.
(J) Since the Mean
difference has
Std. aError
p-value
Sig.of 0.002, it is statistically
95% Confidence Interval
Difference (I-J) Lower Upper
significant.
Bound Bound
With a standard deviation of 344.45136, the mean difference between issued currency and reserves
Monetary “issued currency” 427.75455 516.24088 .793 -913.7407 1769.2498
held bybase:
the central bank is 1438.91573.
“Reserve Since the
with the central difference
1866.67027 * has a p-value
395.65528 .002of 0.005, it is statistically
758.0210 2975.3195
significant. bank”
issuedWith a standard error of 395.65528, the mean difference
currency: “Reserve with the central *
between the monetary base and reserves
1438.91573 344.45136 .005 476.5545 2401.2770
held by the central bank is 1866.67027. Since the difference has a p-value of 0.002, it is statistically
bank”
Table 9: Test of Homogeneity of Variances
significant. Table 8: Multiple Comparisons by Dunnett T3
Term
WithWith
a standard Method
deviation of 516.24088,Levene
the Statistic
mean df1 between
difference df2 the monetary
Sig. base and issued
a standard deviation of 344.45136, the mean difference between issued currency and reserves
With a standard deviation of“Based
Market exchange on Mean”
516.24088, 13.859 1866.67027.
the mean difference 10 Since the121difference.000
has a p-value of 0.002, it is
currency
between rates heldtois
the (YER by427.75455.
monetary the central
base and
Since
bank
issued
the
is
currency
difference
1438.91573.
is
is not statistically
Since
427.75455.
statistically
the difference significant,
has a
significant.
the
p-value
With a
p-value
of 0.005,isit0.793.
standard is statistically
Based on Median 10.268 10 121 .000 deviation of 344.45136,
Since the difference is not statistically significant, the p-value is the mean difference between issued currency and reserves held by
0.793. Dollar)
significant. Based on Median and 10.268the central bank
10 is 1438.91573.
20.571 .000the difference has a p-value
Since
With a standard error of 395.65528, the mean
with adjusted “df”difference between of 0.005, it is statistically significant.
the monetary base and reserves held by the central bank is
Table 9: Test of Homogeneity
“Based on trimmed of Variances 13.347 10 121 .000
mean”
Term Method Levene Statistic df1 df2 Sig.
Market exchange “Based on Mean” 13.859 10 121 .000
The results of a test for homogeneity of variances using four different methods—based on mean,
rates (YER to Based on Median 10.268 10 121 .000
based onDollar)
median, based on the median with modified degrees of freedom, and based on trimmed
Based on Median and 10.268 10 20.571 .000
mean—for the variable "Market exchange
with adjusted “df” rates (Yemeni riyal/Dollar)" are shown in the table
(df1 on
“Based
above. Degrees of freedom andtrimmed 13.347 and significance
df2), the Levene statistic, 10 121
(Sig. The.000
statistics
mean”
demonstrate that the variations among the various techniques are not all equal. Significant p-values
Table 9: Test of Homogeneity of Variances
are included in theofSig
The results (all for
a test p-values are less of
homogeneity than 0.05). The
variances column
using demonstrates
four different this. Inferring
methods—based on mean,
The results of a test for homogeneity of variances using four demonstrate that the variations among the various techniques
that
different thebased
data could
on on
methods—based not
median,
mean,have
baseda normal
based onon thedistribution,
median, median the it modified
based onwith would
are not be necessary
all degrees of to analyse
freedom,
equal. Significant it using
and
p-values based
are several
on trimmed
included in the Sig
medianmethods.
with modified degrees of freedom, and based on trimmed (all p-values are less than 0.05). The column demonstrates this.
mean—for themean—for the variable
variable "Market exchange "Market exchange
rates (Yemeni riyal/ rates (Yemeni
Inferring that theriyal/Dollar)"
data could not are
haveshown
a normalin distribution,
the table it
Dollar)" are shown in the table above. Degrees of freedom (df1 would be necessary to analyse it using several methods.
and df2),
above.statistic,
the Levene
Degrees of freedom (df1 and df2), the Levene statistic, and significance (Sig. The statistics
and significance (Sig. The statistics
Table 10: ANOVA Test
demonstrate that the variations among the various techniques are not all equal. Significant p-values
Sum of
are included in the Sig (all p-values are less than 0.05). The column demonstrates this. Inferring
Source Squares df Mean Square F Sig.
that the data
Between could not8504307.583
Groups: have a normal distribution,
10 it would be necessary
850430.758 114.559 to analyse
.000 it using several
methods.
Within Groups: 898245.653 121 7423.518 - -
Total= 9402553.236 131 - - -
Table 10: ANOVA Test Table 10: ANOVA Test

The difference between the groups accounts for (85.04%) of the variation in the data, as indicated
The difference between the groups accounts for (85.04%)Sum of of the (0.05) level, the F-statistic is statistically significant at (114.559).
by the between-groups
variation in the data, as Source sum of squares,
indicated by the which
between-groups
Squares sumisof(8504307.583).
This
df indicates
Mean The
that thedifference
groups differ
Square Fwithin theSig.
groups
significantly from one another.
squares, which is (8504307.583). The difference within the groups The p-value, which is less than 0.05, is 0.000. This shows a low
Between
accounts for (14.96%) of the Groups:
variation in the data,8504307.583 10 that
as indicated by likelihood 850430.758 114.559
the reported results .000 by accident.
were obtained
the within-groups sum of Within
squares,Groups: 898245.653
which is (898245.653). 121 the ANOVA
At the Overall, 7423.518 test - results show- that the groups differ
J Huma Soci Scie, 2023 Total= 9402553.236 131 - - - Volume 6 | Issue 9 | 319

The difference between the groups accounts for (85.04%) of the variation in the data, as indicated
significantly. This indicates a disparity in the mean values of the
groups and that the groupings are unequal.
5. Discussion and Result
Based on the provided data analysis, evaluate each hypothesis
below:
Hypothesis 1: There is a significant increase in Yemen's monetary
supply (M2) from 2011 to 2021.
The data analysis supports this hypothesis as both M1 and M2
steadily increased over the years. The values for M2 increased
from 2268.2 in 2011 to 7229.1 in 2021, indicating a significant
increase in Yemen's monetary supply.
Hypothesis 2: The mean values of M1 and M2 are significantly
different.
The data analysis confirms this hypothesis. The independent
samples test shows a significant difference between the mean
values of M1 and M2, with a mean difference of 2081.527 and a
95% confidence interval ranging from 735.043 to 3428.011.
Hypothesis 3: A significant difference exists in the mean values of
the monetary base, issued currency, and reserve with the central
bank.
The multiple comparisons and the ANOVA test support this
hypothesis. The multiple comparisons revealed significant
differences between the mean values of the monetary base and the
reserve with the central bank and between the mean values of the
issued currency and the reserve with the central bank. The ANOVA
test reveals a significant difference in the means of the groups.
Hypothesis 4: The exchange rate of the Yemeni Rial to the dollar
has significantly fluctuated over the years 2011 to 2021.
The provided table and graph for the exchange rate show
significant fluctuations over the years, with values ranging from
214.89 to 1500.6. The graph also shows an increasing trend from
2016 onwards. Therefore, this hypothesis is supported by the data
analysis.
In conclusion, all four hypotheses are supported based on the data
analysis.
6. Conclusion
The purpose of this research study was to examine the economic
causes of inflation in Yemen as well as potential strategic responses.
The research looked at a number of things, such as Yemen's monetary
supply (M1 and M2), the mean values of M1 and M2, the mean
values of the monetary base, issued currency, and reserve with the
central bank, as well as the rate at which the Yemeni Rial fluctuated
about the dollar from 2011 to 2021. The General Administration of
Research and Statistics of the Central Bank of Yemen provided
the information that was gathered. Yemen's monetary supply
(M1 and M2) research revealed considerable growth from 2011
to 2021. M1 climbed from 993 in 2011 to 4479.3 in 2021, while
M2 consistently rose from 2268.2 in 2011 to 7229.1 in 2021. This
implies that Yemen's money supply significantly increased during
the studied period. The mean values of M1 and M2 were compared,
and the results showed a substantial difference between the two
variables. The mean difference was determined to be 2081.527,
J Huma Soci Scie, 2023
with a standard error difference of 645.497. This result shows that
M1 and M2 have different mean values. The research also looked
at the monetary base, issued money, and reserve with the central
bank's mean values. The findings revealed a sizable variation in
the mean values of these factors. The Dunnett T3 test of multiple
comparisons revealed that the mean difference between the
monetary base and issued currency was not statistically significant.
However, the reserve held by the central bank, the issued currency,
and the monetary base differed significantly. More investigation
would be required to understand the underlying causes of these
disparities. Lastly, the exchange rate of the Yemeni Rial to the
dollar was analysed. The data showed significant fluctuations in
the exchange rate over the years 2011 to 2021. The values varied
greatly, with a substantial increase observed from 2016 onwards.
The highest value was recorded in November 2021, with 1500.6
Yemeni Rials to the dollar. This indicates significant volatility
in the exchange rate during the analysed period. This research
provides the economic factors influencing inflation in Yemen. The
substantial increase in monetary supply, differences in mean values
of various financial variables, and exchange rate fluctuations
highlight the complex dynamics of the Yemeni economy. These
findings can inform policymakers and economists in developing
strategies and interventions to manage inflation and stabilise the
economy in Yemen [7-12].
References
1. Statistics, G. A. (2021). Monetary and financial developments.
Central Bank of Yemen.
2. Awad, S. M. (2008). Inflation and its reflection on youth in
the Republic of Yemen. The Economist Magazine, Aden
University - Faculty of Economics.
3. Al-Qatbari, M. D. (2022). Analysis of performance indicators
of some macroeconomic variables in Yemen Econometrics
analytical study for the period (2011-2019). Andalus Journal
for Humanities and Social Sciences, 56(9), 38-81.
4. Team, Y. a. (2022). THE YEMENI FINANCIAL SECTOR:
CHALLENGES AND OPPORTUNITIES FOR RECOVERY.
ACAPS ANALYSIS HUB.
5. Studies, T. E. (2017). Yemeni Economic Bulletin: The Battle
to Control Banks Threatens to Disrupt the Financial Sector.
The Economic Unit of the Sana'a Center for Strategic Studies.
6. Sumathy, M., & Vipin, K. P. (2017). Digital payment systems:
Perception and concerns among urban consumers. IJAR, 3(6),
1118-1122.
7. AlSamawi, A. M., Al-Fosail, B. A., & Al-Hada, S. Z. (2020).
Electronic Payment Services in Yemen: challenges and
opportunities for success. Institute of Banking Studies.
8. Al-Samawi, A. (2022). Financial inclusion in Yemen, reality
and ambition. Banks Magazine, Yemeni Banks Association
2022.
9. Borkar, D. S., & Galande, M. A. (2020). Digital Payment:
The Canvas of Indian Banking Financial System. European
Journal of Molecular & Clinical Medicine, 7(8), 2020.
10. Hup, A. a. (2022). The key economic incentives of peace .
Yemen analysis team.
Volume 6 | Issue 9 | 320
11. Singhal, R. (2021). Impact and Importance of 12. Studies, T. E. (2022). Challenges and prospects for electronic
Digital Payment in India. Internationaljournalof money and payment systems in Yemen. The Economic Unit of
Multidisciplinaryeducationalresearch. the Sana'a Center for Strategic Studies.

Copyright: ©2023 Ramzi Abdullah Ahmed Hassan. This is an open-access

article distributed under the terms of the Creative Commons Attribution
License, which permits unrestricted use, distribution, and reproduction in
any medium, provided the original author and source are credited.

J Huma Soci Scie, 2023 https://opastpublishers.com/ Volume 6 | Issue 9 | 321

View publication stats