Afghani Ranks As World's Best-Performing Currency This Quarter
In recent data compiled by Bloomberg, the currency of Taliban-controlled Afghanistan, the Afghani, has surprisingly become the best-performing currency globally this quarter, with a remarkable nine percent increase in value. This surge is attributed to the influx of billions of dollars in humanitarian aid and increased trade with neighboring Asian countries. Over the past two years, the Taliban has implemented strict measures to control the currency, including prohibiting the use of dollars and Pakistani rupees in local transactions and imposing stringent restrictions on the movement of US dollars out of the country. Online trading has also been criminalized, with penalties that include imprisonment.
Despite this currency boost, Afghanistan remains mired in poverty and holds one of the worst global human rights records. While the Afghani has witnessed a substantial 14 percent increase in value over the year, it ranks third globally, behind the currencies of Colombia and Sri Lanka. Afghanistan’s isolation from the global financial system due to international sanctions exacerbates the dire situation, characterized by high unemployment, two-thirds of households struggling to afford basic necessities, and inflation transitioning to deflation.
To alleviate economic hardships, the United Nations has been sending regular shipments of US dollars, totaling up to $40 million, to support the impoverished population for at least 18 months since the end of 2021. Money changers, known as “sarraf,” play a crucial role in exchanging foreign currency in Afghanistan, operating in markets and cities, with the Sarai Shahzada market in Kabul serving as the nation’s de facto financial hub. The central bank has not imposed trading restrictions, but due to financial sanctions, nearly all remittances to Afghanistan now rely on the Hawala money transfer system.
The United Nations estimates that Afghanistan requires approximately $3.2 billion in assistance this year, but only $1.1 billion has been provided, leaving a significant gap in aid. Last year, the organization spent about $4 billion to address the dire situation in Afghanistan, where 41 million people faced the threat of hunger.
