Prerana Toshniwal, Pune
Afghanistan’s currency, Afghani, has taken everyone by surprise by climbing to the top of global rankings in this quarter. For extreme poverty stricken and poor human rights records, Afghanistan current currency controls, cash inflows and other measures have helped them become the best performing currency this quarter.
According to the data from Refinitiv, a jump of 9% has been seen since last quarter in July, mainly attributed to the billions of dollars in humanitarian aid and an increase in trade with other Asian countries.
For the last two years, Afghanistan has been under Taliban rule. Taliban has unleashed a series of measures to keep this stronghold of the Afghani. These include banning the use of dollars and Pakistani rupees in local transactions, tightening restrictions on bringing greenbacks outside the country of Afghanistan, and making online trading illegal. Rules of imprisonment have been implemented to threaten those violating these rules.
The jump also means that the Afghani is now up 14% year-to-date which makes it the world’s third strongest performing currency of 2023. However, the reduction in currency losses experienced during regime change masks the enormous upheaval that continues on the ground, with Afghanistan essentially cut off from the global financial system due to sanctions. There is rampant unemployment, two-thirds of households struggle to have basic household items, and inflation has turned into deflation according to a report by the World Bank.
The United Nations, since the end of 2021, has been sending planeloads of US dollars regularly to provide support to the distressed population with amounts as high as $40 million dollars arriving every week. The World bank has also forecasted that their economy will stop contracting this year, posting growth of 2% to 3% until 2025, though it warned of risks such as reduction in global aid as the Taliban intensifies its repression of women.
Kamran Bokhani, an expert in Middle Eastern, Central, and South Asian affairs at the Washington-based New Lines Institute for Strategy & Policy, has called this a short term growth and has warned that the currency controls might be working for now but the economic, social and political instability in Afghanistan is being undermined.