According to a new report, the Taliban controls the world’s best-performing currency in the quarter. Afghanistan’s Central Bank is auctioning up to 16 million dollars every week to support its currency.
Gravitas: Afghan currency becomes ‘best performing’
Our next story will make your eyebrows touch the ceiling because it’s just too astonishing to be true. This story concerns the Taliban. According to a new report, the Taliban controls the world’s best-performing currency in the quarter. I’m not making this up. According to data compiled by Bloomberg, the Afghani, which is Afghanistan’s official currency, has climbed around nine percent this quarter. And if we speak of the annual figures, this Afghani is up about 14 percent this year—a feat that is indeed amazing and, dare I say, unbelievable for the poverty-stricken nation.
The question is, how did the Taliban achieve this? Well, to be frank, the Taliban didn’t do much. The main factors behind this spike are the billions of dollars coming in from humanitarian aid, rising trade activity by Afghanistan’s neighbors, stronger cash inflows, and frequent remittances. All these factors combined have helped propel the Afghan currency higher up in the ranks. Interestingly, another major factor behind the spike has been the smuggling of dollars from Pakistan. This has given the Taliban a lifeline of sorts. According to reports, Afghanistan’s Central Bank is auctioning up to 16 million dollars every week to support its currency.
Lastly, some measures by the Taliban have also played a small role, including tightening restrictions on bringing greenbacks outside the country, making online trading illegal, and jailing anyone who violates these rules.
So, what exactly is the Afghani’s value? Well, as of Wednesday evening, it was trading at 78.20 against the dollar.
The next question: What is the value of the Pakistani rupee? Last we checked, it was trading at 288.65 against the dollar. This begs the question: Is Afghanistan a better economic bet than Pakistan? Has it become a better place for investments than Pakistan? I mean, the Afghani has clearly outrun the value of the Pakistani rupee.
To add to this, global bodies are predicting a better growth forecast for the country. Imagine that. Take the World Bank, for instance. It is predicted that the Afghan economy will stop contracting this year. It adds that the economy may even see a growth of two to three percent until 2025. The same World Bank says that Pakistan’s economic growth could slow down to two percent in the current financial year because of the devastating floods it has faced and the ongoing political turmoil in the country.
On the other hand, you have Afghanistan, which is getting millions after millions in cash packages from the global community. Take this report from February, for instance. This is when Afghanistan’s Central Bank received a cash package of 40 million dollars. Then in May, a fresh batch of 40 million US dollars reached Afghanistan. Reports said this was the fourth batch of cash sent as humanitarian aid—all to help the poor country enhance its forex reserves.
And then we have the United Nations apparently deployed around 5.8 billion dollars to Afghanistan in aid all since the Taliban took over in 2021. Clearly, the world is doing more to help Afghanistan than Pakistan.
That said, if the Taliban has to sustain this help, it will have to listen to the world too. It will have to let go of its restrictions on women. It will have to end its repression of women, also its many human rights violations like the detention of dissidents and torturing of prisoners. The international aid it’s receiving has to be complemented by concrete steps that uphold the rights and liberties of the Afghan people.
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The great Afghanistan currency surge: Afghanistan’s uncertain economic outlook
In a world where geopolitics and economic struggles collide, the story of Afghanistan’s currency unfolds. The currency’s rise amidst chaos has made many people scratch their heads. How did this happen? This report tells you how billions of dollars in humanitarian aid and a peculiar set of circumstances have propelled Afghanistan’s currency, the Afghani, to unexpected heights.
Billions of dollars from humanitarian aid and increasing trade with Asian neighbors have pushed Afghanistan’s currency to the top of the global rankings this quarter—an unusual feat for a country marred by poverty and one of the world’s worst human rights records. The Afghani’s rise has been nothing short of spectacular; it has climbed around nine percent this quarter, surpassing even the Colombian Peso. For the year, it’s up by about 14 percent, ranking third globally.
Beneath this currency rise lies a grim reality: Afghanistan is still largely cut off from the global financial system due to sanctions. Unemployment is rampant, households struggle to afford basic items, and inflation has turned into deflation. To alleviate some of the suffering, plain loads of US dollars arrive almost weekly from the United Nations, totaling up to 40 million every 18 months since the end of 2021.
In today’s Afghanistan, foreign exchange is primarily traded through money changers known locally as “saraf.” Due to financial sanctions, almost all remittances now flow into Afghanistan via the centuries-old Hawala money transfer system. The United Nations estimates that Afghanistan needs about 3.2 billion in aid this year, and they’ve deployed approximately 1.1 billion dollars of that. Last year, the UN spent around 4 billion as half of Afghanistan’s 41 million people face life-threatening hunger.
The World Bank forecasts that Afghanistan’s economy will stop contracting this year, with growth expected at 2 to 3 percent until 2025. However, there are risks, including a potential reduction in global aid as the Taliban intensifies its repression of women. While Afghanistan’s currency soars, neighboring Pakistan faces its own financial wars. In stark contrast, Pakistan is under a heavy debt burden and low forex reserves. As a result, its currency, the rupee, has crossed 300 per US dollar—a historic low for the South Asian country.
The economic dynamics in the region are complex, with Afghanistan’s unique circumstances playing a significant role in its currency rise. Yet, even as Afghanistan’s currency strengthens, the humanitarian situation remains dire. Frozen foreign exchange reserves and concerns about the central bank’s independence have delayed vital aid. The UN warns that a 30% reduction in foreign aid this year could lead to a 40% drop in per capita income.
The situation in Afghanistan is far from stable. Human rights abuses, internal divisions, and the resurgence of global terrorist groups add to the challenges the nation faces. As the world watches the fate of this nation, its people, and its currency, the Afghani, the situation remains uncertain. Euro Report, We on World Is One Beyond, is now available in your country. Download the app now to get all the news on the move.
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