Taliban bans use of foreign currencies in Afghanistan

Kabul, Nov 3 (EFE).- The Taliban announced Wednesday a ban on foreign currencies in domestic transactions, a measure seeking to bolster the local currency, which after the Taliban’s takeover of Afghanistan, touched its lowest value in 20 years.

“The economic situation and national interests of the country require that all Afghans have to use Afghan currency in trade,” the Taliban said in a statement.

“The use of foreign currencies has negative effects on the country’s economy and its loss reaches all our compatriots. Violators of this statement will be legally dealt with,” the statement added.

The Taliban’s decision comes at a time of serious crisis for Afghanistan’s financial system, which is on the verge of collapse after the United States froze about $10 billion of its funds following the Taliban takeover on Aug.15.

Economics professor Ebadullah Nasiry told EFE that this was a “very effective in the current situation but needs an organized procedure and mechanism for implementation.”

“Cash transaction in Afghani (Afghan currency) will increase demand for our currency which will have a positive effect, however (…) the Taliban have to focus not only on cash transaction but also digital transaction,” he added.

In this regard, Nasry advocated drawing the attention of investors and entrepreneurs to “bring back the stability of the Afghan currency,” whose value is among the lowest in the last two decades.

Currently, Afghan private banks allow transactions only in Afghanis, leading to a rise in foreign exchange rates, as they cannot operate in dollars.

“As our currency is experiencing its lowest plunge, this is a good decision and it will not only positively affect the stability of our currency but also reduce the interests on foreign exchange,” Arif Nikmal, a private sector finance specialist, told EFE.

However, Mohammad, a banker working in a stock market in the southern city of Kandahar, did not share the same positive sentiment.

The banker told EFE that “due to instability in Afghani most of the businessmen, tellers and money changers have already converted their capital to USD and Pakistani rupees” so that the money does not lose value.

Mohammad was of the opinion that the Taliban’s decision would cause a great loss in an “import-oriented” Afghanistan, where businessmen need the freedom to use different currencies and avoid exchange-rate losses. EFE

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