How does the Taliban control the ‘world’s best-performing currency, the Afghani’, in poverty-stricken Afghanistan?

If we talk about the currency of Afghanistan, today one US dollar is equal to 79 Afghanis. In a poor economy like Pakistan, the same dollar is available at around 290 Pakistani rupees, and in a booming economy like India, 84 Indian rupees are equivalent to one US dollar. Last week when Bloomberg, a financial reporting organization, declared Afghanistan’s currency as the best-performing currency for the quarter (i.e. the last three months), many people were surprised, while Pakistan’s Some users on social media called it a ‘success’ for the ruling Taliban in Afghanistan.

However, people are also surprised that a country whose existing ‘government’ is not formally recognized by any country in the world, which is under international sanctions, whose overseas assets are frozen and where hunger and poverty are rampant. Dere Hai, What is so special about its currency that it has been the world’s ‘best performing’ currency for the past three months?

In this report, we examine how this was possible and the factors that made the Afghan currency the ‘best performing’ currency.

Afghanistan’s currency ‘third best currency’

At the end of last month, the news came out that the Afghan currency called ‘Afghani’ had strengthened so much against the dollar that one dollar became equal to 73 Afghani, but the next day it had reached 78 Afghani again. On the evening of October 1, one dollar was equal to 83 Afghanis.

According to a Bloomberg report, Afghanistan’s currency has gained 9 percent against the dollar since July this year, making it the third best-performing currency after Colombia’s peso and Sri Lanka’s rupee. has come out.

The report states that the main reason for this improvement is the Taliban government’s control over the currency, billions of dollars received by Afghanistan in aid, and the increase in remittances sent by Afghan citizens living abroad to their relatives. Has caused

It should be remembered that according to a recent report from the World Bank, about 66 percent of the citizens living in Afghanistan can hardly afford the necessities of life, while unemployment in the country is at its peak.

According to the United Nations, since the Taliban took control of the country in 2021, the United Nations has sent 5.8 billion dollars in aid.

Speaking to BBC Urdu, Khan Afzal Hudawal, former caretaker governor of the Afghan Bank and a long-time official working in the Afghan Central Bank, says that the improvement in the value of the Afghan currency is not real but artificial.

“It is artificial because it is not a result of improvement in Afghanistan’s production process,” Naho said. Under the Taliban regime, no commercial and productive activities are taking place in Afghanistan, but the UN aid funds (in dollar form) and some remittances are deposited in banks to control hunger and poverty. Is being done due to which the currency of Afghanistan has improved.

He said that one of the reasons for the improvement of the Afghan currency in the Bloomberg report is that the currency of most countries in the region has depreciated against the dollar in recent days, but artificial and temporary measures. The value of the Afghan currency has increased due to.

He further said that there are various reasons why the value of the Afghan currency has not decreased and one of the reasons is that the Afghan currency has not yet entered the world market because when the Central Bank introduced the dollar into the open market it If you keep it balanced, the situation can be clear. He said that in countries like Afghanistan, the currency exchange rate is not a factor related to the country’s economic development.

“Now trade goods easily reach the market or their destination”

However, while talking to the BBC, a few Afghan businessmen have also mentioned some of the ‘successes’ of the Taliban government, due to which the currency situation has improved.

Speaking to the BBC, Afghanistan Chamber of Commerce officials and businessmen have praised some of the Taliban’s initiatives and said that many of their problems have been solved after the fall of the former government (Ashraf Ghani’s government) and the arrival of the Taliban. have taken place and some difficulties have been reduced which has improved the market situation.

According to Khan Jan, ‘Now there is only one order and everyone is dealt with in the same way.’

He said that, however, after the end of the democratic government, new problems have also arisen, one of which is that after the arrival of the Taliban, Afghanistan has received international aid and support from institutions for the past 20 years, which was two years ago. it is finished. He said that currently there are problems in Afghanistan, but due to strict control in some areas, there is improvement.

According to a representative of local exchange dealers, the Afghan Taliban has banned the use of other currencies, including the Pakistani rupee, in the country, and currently, only the Afghan currency has been ordered for trade, which has led to an increase in the demand for the Afghan currency. has happened

According to Sami Yousafzai, a senior analyst on Afghan affairs, the currency appreciation in Afghanistan is not because there is any economic development in the country. He said that the aid funds coming in the form of dollars from foreign countries and institutions are being deposited in the Central Bank of Afghanistan, due to which the Afghan currency is not only keeping its situation stable for the time being but also its value. I have also increased. He said that there is very limited trade in Afghanistan from outside the country and if it is happening a little, then money is being remitted through different methods instead of regular channels.

What is the policy on Afghan currency?

In Afghanistan, two years ago i.e. in August 2021, the Taliban overthrew the government of Ashraf Ghani and took over the government.

After the Taliban came to power, many experts in government and economic management left the country and migrated to other countries. Former Caretaker Governor of the Afghan Bank, Afzal Hadawal, while explaining Afghanistan’s policy regarding the Afghan currency, said that all countries in the world have different exchange rate policies, some countries have a fixed exchange rate, such as the United Arab Emirates and Nepal. India has a fixed exchange rate while in some countries the exchange rate works based on supply and demand in the market, however, some countries have a ‘managed’ policy.

He said that as far as Afghanistan is concerned, the dollar is in the market, but the Central Bank of the country intervenes in it and this is done so that inflation can be controlled and the exchange rate of the Afghani at this level. It is being kept so that when there is trade with neighboring countries or partner countries, the goods can be available at a lower cost. According to Khan Afzal, in the current situation, more dollars are coming from foreign countries, but due to government control, people cannot take them out, so the trade in the whole country is done only in Afghan currency, so the demand for Afghan currency increases. Has happened. He said that there is an influx of physical dollars in Afghanistan, besides, trade agreements are not being done through the bank because trade with countries that are far away is difficult and the trade with neighboring countries is the local exchange market. Through which payment is made by reference.