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Afghani falls to record low amid pressing currency shortage

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(Last Updated On: November 26, 2021)

Economists are warning of an acute currency shortage in Afghanistan and the subsequent economic predicament as the Afghani has plummeted to its record low in trading.

The United Nations Development Programme (UNDP) issued a report earlier this week urging prompt actions to prevent the Afghan banking system from collapsing, which is now “in disarray” featuring inadequate liquidity and decreased deposits.

The largest currency exchange market in Kabul now has been crowded with people and the Afghani has dropped to its all-time low.

Before the Islamic Emirate of Afghanistan (IEA)’s takeover of Kabul in mid-August, one U.S. dollar was equal to about 70 Afghanis. But now the exchange rate hovers around 90 Afghanis to the dollar. The continued depreciation of the Afghan currency sparked fears among residents, with many flocking to the exchange market.

“Unfortunately in these two weeks the Afghan currency has been dropping down against foreign currencies with one dollar costing 95.5 Afghanis last week. Then the Afghanistan Bank released a statement that they will put 10 million U.S. dollars into the market, more than the 2.5 million dollars they actually took out. However, the price [of the U.S. dollar] didn’t go down but unfortunately have increased day by day,” said Zirak, spokesman from the all money dealers of Afghanistan.

Zirak said the country’s currency shortage was fueled by the combination of its assets frozen by the United States, the increasing domestic demand for U.S. dollars, as well as banks’ restrictions on dollar withdrawal.

The UNDP report noticed that non-performing loans in Afghanistan had increased from around 30 percent at the end of 2020 to 57 percent in September this year.

With the current trend and withdrawal restrictions, approximately 40 percent of the country’s deposit base will be lost by the end of 2021, said the report.

The currency shortage also comes along with rising prices. Some residents and businessmen in Kabul said that the prices of major commodities, such as food and fuel, have almost doubled compared with last year.

A Kabul resident is calling for the U.S. to release the frozen assets to save people’s lives.

“The U.S. blocked the money of Afghanistan, leading to the economic downturn. The poverty rate has reached its peak and people will die, so we urge the U.S. to release money of Afghanistan because [if not,] sure the people will die,” said Mustafa Bahram.

 

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Central Bank says ATM to get operational in Afghanistan

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(Last Updated On: January 14, 2022)

Da Afghanistan Bank (Central Bank of Afghanistan), said Thursday, said that Automated Teller Machine (ATM) services by commercial banks will be resumed in the country.

In a statement issued on Thursday, Da Afghanistan Bank stated that the decision was made after a series of discussions with commercial banks and the union of banks of the country.

The ATM services of banks were stalled after the Islamic Emirate of Afghanistan (IEA) regained power on August 15 last year.

According to the statement, the ATMs will be available at specific locations for the customers.

“Da Afghanistan Bank is striving to return banking sector to normal and reactivating the ATMs is a good news [for people] and [Da Afghanistan Bank] is trying to bring further facilities to the people.” Reads the statement.

Da Afghanistan Bank, so far, has not disclosed the amount of money people can withdraw from the ATMs.

Currently, people can withdraw up to $400 from dollar-denominated accounts or 30,000 Afghanis a week from the previous limit of $200 or 20,000 Afghanis.

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Afghan carpetmakers raise concerns over shortage of wool due to smuggling

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(Last Updated On: January 14, 2022)

Afghanistan’s National Union of Carpet Manufacturers raised concerns on Thursday around the smuggling of woolen fleece from sheep into other countries, which has led to a shortage of the raw material for Afghan carpet weavers.

Afghan carpet producers said that farmers in Ghazni, Zabul, Farah, Kandahar, and Helmand provinces are harvesting the fleece and then smuggling it into other countries.

According to the union, they have as a result been forced to import Iraqi and Saudi yarn to use in the local carpet industry.

“Our (woollen) fleece is being smuggled to Pakistan and India, but we have to import yarn from Iraq and Saudi Arabia,” said Mohammad Naeemzada, on carpetmaker.

“The price of one square meter of carpet has increased by 600 AFN. Because we import yarn from other countries, due to smuggling of our own fleece,” said Noor Ahmad Noori, the head of the Afghan carpet producers union.

The Ministry of Finance (MoF) meanwhile said that they have also asked all customs offices at border points to clamp down on people exporting the raw material.

The spokesman for the MoF Ahmad Wali Haqmal said: “The Islamic Emirate needs time, the process [to prevent smuggling] needs time. We will solve the problems, and will prevent smuggling.”

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Uzbekistan restores electricity to Afghanistan after fixing power plant problem

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(Last Updated On: January 13, 2022)

Da Afghanistan Breshna Sherkat (DABS) said the electricity supply from Uzbekistan has returned to normal after output fell by 60% due to technical problems.

The power supply company said in a statement early Thursday that the problem at a power station in Uzbekistan has now been resolved and that electricity supply to Afghanistan has been restored.

Two days ago, Uzbekistan was forced to cut supply by 60%, which left large parts of Afghanistan without power.

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