BackAfghan currency best performing in this quarter; global aid, Taliban-imposed curbs behind surge
On a yearly basis, the afghani has climbed by 14 percent, making it the third strongest performer after Colombia and Sri Lanka's currencies.
PremiumAfghani, the currency of conflict-ridden Afghanistan, has emerged as the best performing currency of the September quarter so far, with the surge being attributed to the massive dollar inflow in the form of humanitarian aid, as well as the currency control measures imposed by the ruling Taliban.
The afghani was trading at around 78.25 against the US dollar on September 26. As per the quarterly data compiled by Bloomberg, the currency has climbed by 9 percent, outperforming the Colombian peso which recorded a 3 percent gain during the same period.
On-year basis, the afghani has climbed by 14 percent, which makes it the third strongest performer after Colombia and Sri Lanka's currencies, according to the news agency's data.
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Overseas aid, which has been critical in keeping the Afghan economy afloat, has amounted to the tune of billons of dollars. The United Nations has assisted with $5.8 billion in the form of aid and development, since the regime change in August 2021 led to a humanitarian crisis in the West Asian nation. Out of the stated amount, $4 billion was transferred in 2022, at a time when around 2 crore Afghans were feared to be facing life-threatening hunger.
Afghanistan is likely to secure more inflow of foreign currency, as the Taliban seeks to use the country's vast natural resources, including the reserves of Lithium, to mop up investments.
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Furthermore, Afghanistan was also included under China's Belt and Road Initiative in May this year, which holds the potential of increase the quantum of foreign investment to fund the country's infrastructure projects.
Behind the strengthening of afghani, point out analysts, is also the currency controls imposed by Taliban. The ultra-conservative regime has banned online trading, outlawed the use of dollars and Pakistani rupee for settling domestic transactions, and has renewed its efforts to bring greenbacks outside the country.
A resilient currency can help Afghanistan to tackle inflationary pressures in the wake of a surging crude. The oil prices are feared to cross the $100 per barrel mark.
The resurrection of afghani has also allowed the country's central bank to ease the limits on dollar withdrawals, raising it from $25,000 to $40,000 per month for businesses, and from $600 to $200 a week for individuals.
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