The Central Bank this week said the value of the Afghani currency continues to drop against the US dollar in the face of ongoing political tension in the country.
Central Bank Vows To Stabilize Afghani Against Foreign Currencies
The Central Bank of Afghanistan says the fall of the Afghani against foreign currencies is temporary and that the value of the country’s currency will strengthen in the near future.
CBA officials said the bank has injected over $2.2 billion USD into the country’s market to prevent the increase of prices of goods on the local market.
In the past few days the Afghani has dropped to 70 AFs for one US dollar.
“Unfortunately people in Afghanistan have somehow made the dollar an indicator for prices. Prices on the local markets has an impact on people’s purchasing capacity which has an impact on the welfare of customers,” said Sayed Ishaq Alawi, general manager of money politics at the Central Bank.
Money exchangers said the value of the Afghani against the US dollar is dependent on supply and demand.
“External and domestic factors as well as political issues have an impact (on the value of Afghani against foreign currencies), but the main role (in this respect) goes to supply and demand,” said Parwiz Ofyani, deputy head of money exchangers union of Shahzada Market in Kabul.
Analysts said the free market for foreign currencies is one of the main reasons for increasing the dependence of markets on foreign currencies, particularly on the US dollar.
“If we measure the value of Afghani currency against foreign currencies based on an annual assessment, it has dropped by at least 19 percent. We compare with the solar year 1394. Therefore, the duty of the Central Bank in such a time is to interfere in the market,” said Hasibullah Moahid, lecturer at Kabul University.
The Central Bank this week said the value of the Afghani currency continues to drop against the US dollar in the face of ongoing political tension in the country over the past few weeks.
Besides the rise in dollar value against the Afghani, the price of some goods has also risen on local markets.
According to the bank’s chairman, this year the bank successfully injected over $500 million USD as an additional amount in to the treasury and the money raised gross foreign exchange reserves to over $8 billion.
CBA officials have said that budget spending significantly increased in the last month of last year’s fiscal year and the issue paved the way for a sudden flow of Afghani currency onto the local markets, which they said also affected the Afghani value.
According to them weaker currencies in neighboring countries and political tension has also attributed to its decrease.
“The tensions we witnessed in the country over the past two months is one of the key reasons behind the price hikes and the dropping of the Afghani currency against the dollar; these issues need to be resolved, because it has major implications,” Khalil Sediq, Chairman of the Central Bank said Monday.