Afghanistan’s central bank said on Tuesday it was work-ing to ensure the stability of the afghani, a day after the currency lost almost 12% of its value against the dollar in a matter of hours amid a deep-ening economic crisis and soaring inflation.
The abrupt withdrawal of for-eign aid following the Taliban victory in August has left Af-ghanistan’s fragile economy on the brink of collapse, with prices for food, fuel and other basic staples rising rapidly out of reach for many.
The central bank issued a statement saying that it had held a number of meetings with foreign exchange deal-ers, representatives of com-mercial banks and the busi-ness sector to halt the fall in the afghani. “Based on its strategic plan-ning policies, Da Afghanistan Bank has always tried to avoid volatility that could be harmful to the purchasing power of the people,” it said.
The crisis has accelerated sharply in recent days. On Monday the afghani, which traded at around 77 to the dol-lar before the fall of Kabul and at 97 a week ago, dropped from 112 to the dollar in the morning at Kabul’s Sarai Shazada money market to 125 by the afternoon.
On Tuesday it had recovered slightly and was being quoted at around 118-120 following the central bank move. “The Islamic Emirate said it would bring the dollar down and issue dollars on the mar-ket and it’s changing now,” a dealer at Sarai Shahzada said, using the name for the new Taliban government. However the pressure on the afghani has already had a stark impact on the prices of daily necessities in an econ-omy where unemployment is widespread and where even many in work have not been paid in months.
Within the space of a week, wholesalers said the price of a 50 kg (110 lbs) sack of flour had risen by between 20-40% to between 2,800-3,200 af-ghani, from 2,300 a week ago, with the price of sugar up by a third and rice up by more than 15%. Starved of dollars that used to be physically shipped into Af-ghanistan, and cut off from the world financial system by the fear of U.S. sanctions, the banking system is only par-tially functional and some $9 billion in central bank reserves remain blocked outside the country.—Agencies
