Rebel incursion has not halted central bank operations, says Yemen deputy

Central bank operations are as close to normality as possible despite violent clashes on the streets of Sana'a, according to Ibrahim Alnahari, a deputy governor of the Central Bank of Yemen.

Fighting erupted last week between Shiite rebels known as Houthis and government forces. By the weekend the rebels were in control of much of the capital, including government buildings, military bases and the area surrounding the central bank. Despite a UN-brokered peace deal, the rebels have not relinquished control of the city.

Speaking to CentralBanking.com, Alnahari said operations at the central bank are "as normal as they can be". He described the situation as "tense" but said the central bank had taken measures to mitigate the impact on the banking sector, with some success.

"So far, the banking industry has been able to withstand the consequences of the crisis and this has led to a great extent to a stable exchange rate and confidence in the market," Alnahari said. Despite some increased volatility in recent weeks, the Yemeni rial has remained broadly flat at around 215 rials to the dollar.

According to state media, clashes between the military and rebels have left 270 people dead and a further 460 wounded. Intervention by the UN brought fighting to a halt on Sunday, but reports continue to trickle in via Twitter and local media of isolated outbreaks of violence.

It is not clear how the stand-off will be resolved. The UN agreement signed by both Houthis and government was meant to ensure the rebels would hand over control of Sana'a in exchange for certain concessions, including reductions in fuel prices and the formation of a new government.

Concessions have been delivered, but the rebels have since refused to stand down. A day after the peace agreement was signed, groups of Houthis were seen in the capital in possession of a range of heavy military vehicles. One photo posted on Twitter showed a captured anti-aircraft gun parked outside the central bank.

Meanwhile, president Abd-Rabbu Mansour Hadi, backed by the UN as Yemen's legitimate leader, remains in power. In a speech on Tuesday he took pains to emphasise that concessions to the rebels were not a sign of weakness, but rather were efforts to prevent Yemen plunging into – yet another – bloody civil war.

In response to the continuing instability, the US State Department announced yesterday that it would be pulling an unspecified number of its staff from the embassy in Yemen, although it said reduced operations would continue.