The Afghani is the Best Performing Currency in the World.

According to data published by Bloomberg, the Afghan Afghani, the currency of Taliban-controlled Afghanistan, has been the best-performing currency in the globe this quarter.

The Performance of the Afghan Afghani

The currency of Afghanistan, the Afghan Afghani, has demonstrated exceptional performance in the current quarter, as indicated by data collated by Bloomberg. This achievement is noteworthy considering the country’s governance under the Taliban regime. The Afghan Afghani has experienced a significant increase of almost 9% during the current quarter, mostly driven by substantial inflows of humanitarian aid amounting to billions of dollars, as well as the growth in commerce with neighbouring Asian countries. The decision by the Taliban to prohibit the utilization of United States dollars and Pakistani rupees in domestic transactions has additionally contributed to the strengthening of the local currency.

Factors Contributing to Afghan Afghani’s Rise

It is noteworthy and even incredulous that such circumstances pertain to a nation classified as one of the most impoverished globally, coupled with a reputation for abysmal human rights standards, purportedly ranking as the most severe worldwide. The primary drivers of this encouraging and favourable progress may be attributed to the substantial influx of humanitarian aid amounting to billions of dollars, as well as the increasing economic activities with neighbouring Asian countries, as indicated by the Bloomberg statistics. These causes have propelled Afghanistan’s currency to achieve a prominent position in the worldwide rankings during the current quarter.

According to data provided by Bloomberg, the Afghan Afghani had a significant increase of almost 9 percent during this quarter. This growth surpassed the 3 percent gain observed in the Colombian peso. The boost in the Afghan Afghani can be attributed to currency controls, cash inflows, and other remittances. The Afghan Afghani has had a significant increase of almost 14 percent over the course of the year, positioning it as the third highest performing currency globally. This places it behind the currencies of Colombia and Sri Lanka.

However, it is important to note that despite the reduction in the currency’s losses following a change in regime, this does not negate the ongoing significant disruption that continues to prevail in Afghanistan. The country remains largely isolated from the global financial system due to the imposition of sanctions.

Smuggling Of Dollars Into Afghanistan From Pakistan

The smuggling of cash from Pakistan into Afghanistan has emerged as a significant contributing factor that has provided crucial support to the Taliban in recent months. According to Hassibullah Noori, the spokesperson for Da Afghanistan Bank, the central bank of Afghanistan, an approximate amount of $16 million is being auctioned on a weekly basis in order to provide support for the country’s currency.

The central bank has recently responded to the alleviation of currency pressure by raising the withdrawal limit for enterprises from $25,000 to $40,000 per month, and for individuals from $200 to $600 per week, a change that took place over a span of two years. On Monday, the exchange rate for the Afghan Afghani was approximately 78.50 per US dollar.

Afghanistan’s Troubled Past

The previous rule of the Taliban, which lasted from 1996 until 2001, was marred by controversies, violence, interstate fighting, purported support to the global terrorist organisation al-Qaeda, and providing a safe haven to its top leadership, including Osama bin Laden and Ayman al-Zawahiri. As a result, the United States military was able to overthrow the Taliban and put an end to their rule after the 9/11 attacks in the United States.

US Withdraws In 2021

During the subsequent period following the withdrawal of NATO forces, led by the United States, the Taliban assumed control of Afghanistan and implemented various measures to exert control over the local currency, the Afghan Afghani. These measures included prohibiting the use of US dollars and Pakistani rupees in local transactions, as well as imposing stricter regulations on the exportation of US paper dollars from the country. The act has rendered online trade unlawful and imposed the risk of imprisonment upon individuals found in contravention of the regulations.

World Bank Report On Afghanistan

According to a survey published by the World Bank, there is a significant prevalence of unemployment, with around two-thirds of households facing challenges in affording essential commodities. Furthermore, the report highlights a noteworthy shift from inflation to deflation. Regular shipments of United States currency, amounting to substantial sums, have been consistently received from the United Nations with the purpose of providing financial assistance to impoverished individuals. These deliveries, which have been occurring on a near-weekly basis, have been ongoing for a minimum duration of 18 months, commencing from the conclusion of the year 2021.

Kamran Bokhari, an expert in Middle Eastern, Central and South Asian affairs at the Washington-based New Lines Institute for Strategy & Policy, said, “The hard currency controls are working, but the economic, social, and political instability will render this rise in the currency as a short-term phenomenon.”


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