Yemen’s ongoing civil war, now entering its tenth year [[3]], is fueling a dramatic economic divergence between the north and south of the country. A staggering 300% price gap in gold – a conventional safe haven asset – between the cities of Sanaa and Aden highlights the severity of the crisis and the fragmentation of Yemen’s financial system. The widening economic rift is impacting everyday Yemenis, exacerbating a humanitarian situation already considered one of the world’s worst [[1]].
Yemen’s fractured economy is exhibiting increasingly stark divisions, with gold prices soaring to a staggering 300% disparity between the cities of Sanaa and Aden. The price difference, equivalent to over $1 million Yemeni Rial per ‘tael’ (approximately 37.6 grams) in Aden compared to Sanaa, underscores the deepening financial crisis gripping the nation.
Currently, a tael of gold in Aden is trading at 1,517,300 Yemeni Rial, while the same amount in Sanaa costs just 499,000 Yemeni Rial – a difference of 1,018,300 Rial. The price per gram of 21-karat gold reflects this imbalance, selling for 197,600 Rial in Aden versus 61,200 Rial in Sanaa. “We haven’t seen such a dramatic price gap even during World War II,” noted Ahmed Al-Salmi, a trader based in Taiz who has profited from arbitrage opportunities between the two cities despite significant security risks.
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The root of this economic divergence stems from Yemen’s division since 2014 and the ensuing civil war, which has led to a fragmented monetary system and the emergence of distinct exchange rates for the Yemeni Rial. Similar to the economic split experienced by Germany during the Cold War, Yemen’s economy has become sharply divided between north and south. Economic blockades and logistical challenges in transporting goods between regions have further exacerbated the crisis. “If swift intervention doesn’t occur, the situation could lead to a full-blown economic disaster,” warned Dr. Mohammed Al-Arashi, an economic expert.
The situation is creating significant hardship for Yemeni families. Fatima Al-Hadeedi, 28, has been forced to postpone her engagement because her family in Aden cannot afford the current gold prices. Long queues are forming outside gold shops in Sanaa, while stores in Aden are largely empty of buyers. Saeed Al-Maqrami, a goldsmith in Sanaa, reports a surge in demand from southern traders seeking to purchase gold, which has driven up prices even in the northern capital. The anticipated outcome is a northward flow of capital and a potential collapse of the gold market in the south.
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This destructive economic split raises critical questions about the future of Yemen’s economy. The country faces a choice between monetary unification and market stabilization, or a complete economic collapse that will be borne by the Yemeni people. Government and political stakeholders must intervene immediately to salvage what remains of the struggling economy. The key question remains: how long can the Yemeni economy withstand this devastating division?
