How Afghani Beats Dollar; Becomes the World’s Best Performing Currency? | Vantage with Palki Sharma

The Afghani has beaten all other currencies; its value shot up in July, and since then, it has grown by nine percent. This is against the U.S. dollar, the Afghani is the only option for the people there.

How Afghani Beats Dollar; Becomes the World’s Best Performing Currency?

Foreign, I have a question for you. Now, what is the world’s best-performing currency right now? Your first guess might be the US dollar, perhaps the Euro, Japan’s Yen, or even the British pound. But let me tell you, all of these currencies are being overshadowed by this one: The Afghani. It’s the currency of Afghanistan, the Afghani, and it’s the top performer right now.

The Afghani has beaten all other currencies; its value shot up in July, and since then, it has grown by nine percent. This is against the U.S. dollar, and this makes the Afghani the best-performing currency in this quarter. What about this year? Not too bad; in 2023, its value has increased by 14 so far.

The Afghani ranks third in the pecking order, right behind Colombia’s peso and the Sri Lankan rupee. Let’s now examine these figures more closely. The Afghani had broken down once the Taliban had returned. At the time, one dollar got you about 104 afghanis. And what’s the value today? One dollar is worth about 78 Afghanis. So, it’s better than the Indian rupee. The value of the money has significantly increased.
And how did this happen? Did the Taliban take a macroeconomics crash course? Well, certainly not. But when they seized power, they wanted to control the Afghani too. They devised some regulations to govern the money.

The Taliban announced a ban on the dollar and the Pakistani rupee. Locals were not allowed to use and transacting in these currencies was banned in 2021. All foreign currencies were declared illegal in Afghanistan. So now, the Afghani is the only option for the people there. If you want to buy something from the local markets, that’s what you use, the local currency.

Earlier this year, more restrictions kicked in. The Taliban once again targeted the US dollar. They imposed an export cap. People leaving Afghanistan could only take a certain amount of dollars with them, and the restrictions were very specific. If you’re crossing by the land border, you could take up to 500 US dollars. If you’re flying out of an airport, you could carry up to 5,000 US dollars. Online trade must abide by these new regulations, the Taliban banned online Forex Trading. And you have to hear the reason for this. The Taliban said Forex Trading is against Islam. Full marks for creativity. At this rate, the Taliban could give China’s Communist Party a run for their money.

And they did not stop at the statement, by the way. They released a video to drive home the point. It was shared by Afghanistan’s Reserve Bank. It showed two men in a boxing gym while throwing punches; they’re discussing Forex Trading and how it’s against the Muslim faith. That’s what they’re discussing here.

Now, these decisions had a ripple effect. Foreign currencies became scarce in Afghanistan; their circulation dried up, and people started using the Afghani, which is why its value is increasing. So this is not some master stroke. The reality that the surge will eventually peak and Afghanistan’s economic situation is catastrophic will remain unchanged. There is rampant unemployment; two-thirds of the households here cannot make ends meet, and the Taliban is in no position to help. It doesn’t have a lot of money to start with.

How do they run the economy? Mostly through economic aid. Since the end of 2021, the United Nations has made an effort to assist. For 18 months, aircraft carrying large stacks of cash were sent to Afghanistan. Do you know how often these deliveries were made? Nearly every week. How much money did the Taliban get? We don’t have an exact number, but going by some claims, the U.N. delivered up to 40 million dollars every week to Kabul.

Why was this money transported in planes? Because banks cannot do it. Afghanistan cannot access the global banking system, which is why the cash is moved in planes. And what did the Taliban do with this money once it was transported to Kabul? The dollars were converted into the Afghani, that’s the currency of Afghanistan, and then it was released into the market. So you could say the UN also had a hand in propping up the Afghani. In a way, they’re supplying U.S. dollars and buying Afghanis in exchange.

Despite all of the support, the economy is a mess. Afghanistan had at least nine and a half billion dollars in reserves before to the fall of Kabul. The US and its allies cut off Kabul’s access in 2021; it happened right after the democratic government fell. Washington recently announced that it will release part of these monies, but the plan was later postponed. The U.S. found that Afghanistan’s Central Bank is not independent. Washington had concerns and feared that the money could end up in the wrong hands.

There are no checks and balances, anti-money laundering controls, the safeguards against terror financing. This should not be surprising; after all, a terror group is running this country. What else did the U.S. expect? While millions of Afghans continue to suffer, the Taliban will continue to demand additional assistance. Usually, a strong currency is a source of national pride, but for the Taliban, a strong Afghani is like having a gun that won’t shoot.

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