This quarter, the Taliban Owns the Best-Performing Currency in the World
The government, which made power two years ago, has also unleashed a series of measures to keep the afghani in a stronghold, including banning the use of dollars and Pakistani rupees in small-scale transactions and more stringent prohibitions on bringing US dollars abroad. It has made it unlawful and threatened to imprison those who disobey the regulations.
Billions of dollars from humanitarian aid and rising trade with Asian neighbors have propelled Afghanistan's currency to the top of global rankings this quarter — an unusual spot for a poverty-stricken nation with one of the worst human rights records in the world.
The afghani has risen about 9% this quarter, above the likes of the Colombian peso's 3% gain, according to statistics collated by Bloomberg, thanks to currency regulations, cash inflows, and other transfers. With a 14% annual gain, the afghani is now third on the list of world currencies, behind only Sri Lanka's.
However, the reduction in the currency's losses following the regime change also hides the severe instability that still exists in the real world, with Afghanistan mainly cut off from the international financial system due to sanctions.
However, the reduction in the currency's losses following the regime change also hides the severe instability that still exists in the real world, with Afghanistan mainly cut off from the international financial system due to sanctions.
A World Bank report claims that there is a high rate of unemployment, that two thirds of people cannot afford necessities, and that inflation has changed into deflation. The United Nations has been delivering planeloads of US dollars—up to $40 million—every week to aid the impoverished for at least 18 months since the end of 2021.
Expert in Middle Eastern, Central, and South Asian issues at the Washington-based New Lines Institute for Strategy & Policy, "The hard currency controls are working, However, this increase in value will only last temporarily due to the political, social, and economic unrest."
Expert in Middle Eastern, Central, and South Asian issues at the Washington-based New Lines Institute for Strategy & Policy, "The hard currency controls are working, However, this increase in value will only last temporarily due to the political, social, and economic unrest."
Marketplace Stands:
These days, money changers, known locally as sarrafs, who set up shop in cities and villages or set up stalls in markets, handle the majority of the foreign exchange trade in Afghanistan. Tens of millions of dollars are exchanged every day in the vibrant open-air market Sarai Shahzada in Kabul, which serves as the nation's de facto financial center. The central bank claims that there is no cap on trading.
Due to financial sanctions, nearly all remittances are now sent to Afghanistan through the centuries-old Hawala money transfer system, which is used in many parts of the world, including the Middle East. The sarrafs' business heavily relies on hawala.
Due to financial sanctions, nearly all remittances are now sent to Afghanistan through the centuries-old Hawala money transfer system, which is used in many parts of the world, including the Middle East. The sarrafs' business heavily relies on hawala.
According to the world body, the UN has deployed roughly $1.1 billion of the estimated $3.2 billion that Afghanistan needs this year. The organization spent about $4 billion on food aid last year, when half of Afghanistan's population was at risk of starvation.
The economy is expected to stop contracting this year and grow by 2% to 3% until 2025, although there are some risks associated with this prediction, including the possibility of less international aid as the Taliban steps up their repression of women.
The economy is expected to stop contracting this year and grow by 2% to 3% until 2025, although there are some risks associated with this prediction, including the possibility of less international aid as the Taliban steps up their repression of women.
