Afghan central bank moves to halt foreign exchange fall as crisis escalates

By James Mackenzie and Mohammad Yunus Yawar

KABUL (Reuters) – Afghanistan’s central bank said on Tuesday it was working to ensure the stability of Afghans, with foreign currency losing almost 12% of its value against the dollar and a few days after the deepening economic crisis and rising inflation. .

The sudden withdrawal of foreign aid after the Taliban victory in August has left the fragile Afghan economy on the brink of collapse, with food, fuel and other commodity prices rising rapidly.

The central bank said in a statement that it had held several meetings with foreign exchange dealers, representatives of commercial banks and to halt the fall in Afghanistan in the business sector.

“Based on its strategic planning policies, Da Afghanistan Bank has always tried to prevent volatility that could be detrimental to people’s purchasing power,” he said.

At a cabinet meeting, he also called on the government’s economic committee to “take urgent measures to ensure the stability of Afghans,” Taliban spokesman Zabihullah Mujahid said in a statement.

The crisis has accelerated a lot in recent days. The Afghan traded around $ 77 before falling to Kabul on Monday, and a week ago it fell to $ 112 in the morning at the Sarai Shazada money market in Kabul at 125 in the afternoon.

It recovered slightly on Tuesday and was trading around 114-115 after the central bank moved after the move.

“The Islamic Emirate said it would drop the dollar and issue dollars in the market and it is changing now,” said Sarai Shahzada, a trader, using the name of the new Taliban government.

PRICES INCREASE

However, pressure on Afghans has had a major impact on the prices of the daily needs of the economy, which is already widespread and many of those who have been working for months have not been paid.

Within a week, wholesalers reported that the price of a 50 kg (110 lb) sack of flour had risen by 20-40% to 2,800-3,200 in Afghanistan, from 2,300 a week ago to a rise in the price of sugar. one-third and more than 15% rice.

According to a survey conducted by the World Food Program, 98% of Afghans did not eat enough, and seven out of 10 borrowed food.

Dollars were physically sent to Afghanistan on hunger strike, and cut off from the world financial system for fear of US sanctions, the banking system is partially operational and central bank reserves remain locked out of the country for about $ 9 billion.

Last week, the U.S. Treasury Department formalized guidelines for authorizing personal shipments to Afghanistan and protecting senders and financial institutions from U.S. sanctions, offering hope to those with relatives outside the country.

But efforts to raise money have been hampered by international reluctance to fund the Taliban government, which has not yet been officially recognized by another country.

In the long run, employers said the forecasts were hampered by the structural weakness of an economy whose main exports – not just illegal narcotics – were nuts and handmade carpets, and the lack of a clear economic plan for the new government.