Yemen's Western- and Gulf-backed president sacked his prime minister on Monday, blaming him for the economic crisis in a country devastated by war, according to a statement carried by the loyalist Saba state news agency.

President Abd-Rabbu Mansour Hadi appointed Maeen Abdulmalik Saeed to replace Ahmed bin Dagher (photo), who was to be investigated over the "negligence of his government", the statement said.

Yemen is one of the poorest Arab nations and as a result of the war, three-quarters of its population, or 22 million people, require aid and 8.4 million are on the brink of starvation.

Its northern half including the capital Sanaa is largely controlled by the northern Houthi rebel movement, while Hadi, whom a Saudi-led Arab military coalition is trying to restore to power, contests much of the south with separatist groups.

"This (the dismissal) was a result of negligence by the government in the recent period with respect to the economy and to administrative services," the statement said.

Saeed has been a minister of public works in the cabinet, which operates from Saudi Arabia, since last year.

Bin Dagher has been at odds with the southern separatists and their main backer, the United Arab Emirates, a member of the Saudi-led coalition, which has been fighting the Houthis since 2015.

Bin Dagher tweeted his congratulations to Saeed.

Most Yemenis now live in the Houthi-controlled territory, while Hadi government controls the south, backed by a Saudi-led coalition of Arab troops.

The Yemeni currency, the riyal, has lost more than half its value against the dollar since the start of the war.

Authorities sought to boost liquidity last year by printing money when it stood at around 250 to the dollar, but it has now plunged in value to about 700 to the dollar.

UN special envoy Martin Griffiths said this month that the United Nations was discussing an emergency plan to stem the fall and restore economic confidence.

- Reuters