This comes after a sharp drop in value of the Afghani against the US dollar in the past few months.
Concerns Raised Over Prolific Use Of Foreign Currencies
The Shazada Market Money Exchangers Union in Kabul said Thursday that currently foreign currency from neighboring countries is being used more than the Afghani in at least 10 provinces in the country.
They said this is having a negative impact on the national currency and that steps need to be taken to end this practice.
A number of economists have also raised concerns about this and called on government and the central bank to take serious steps to stamp out the problem.
However the central bank said that enforcing the use of the Afghani is not the answer.
But the money exchange union said by enforcing the use of the Afghani, to end the use of Iranian Rial and the Pakistani Rupee, would boost the Afghani after its sharp drop against the US dollar.
Hashim Rawozai, the union’s spokesman, said that the use of the Rupee and Rial is in addition to the prolific use of the US dollar in Kabul - especially with transactions involving the sale of property and vehicles.
"A law is needed to stop the use of foreign currencies so that only AFs are used - especially in provinces that border neighboring countries. This way an estimated seven to eight billion AFs more will be circulated,” said Rawozai.
" The value of everything is determined by demand and supply, when demand decreases, its value also decreases. Using foreign currencies means a decrease or lack of demand for Afghani currency. Hence, preventing currencies of neighboring countries from being used would be an effective way to boost the value of the Afghani,” said Samim Sarem an economist.
But the Governor of Da Afghanistan Bank (Central Bank) Khalil Siddique said that the main reason for the increase in the circulation of foreign currency in bordering provinces is because these regions depend on goods imported from these countries.
The bank said the only way to find a sustainable solution to the problem was for the domestic economy to be strengthened and to decrease imports which in turn would lead to a stronger Afghani.
"Why is the dollar so strong? Because the US economy is strong. Due to the war we unfortunately do not have a good economy, our production (levels) are low. Therefore, we cannot speak of a strong Afghani,” said Siddique.
“Economically, you cannot prove this. Again, I would say that the devaluation of the Afghani is not definitive in terms of our monetary situation. The amount of money we have in the economy is lower than the target we set. Therefore, the central bank's monetary policy proceeds accurately,” Siddique added.
In the past month, campaigns have been launched in Nangarhar and in particular in Jalalabad to encourage locals to use Afghanis opposed to Rupees.