On August 15, 2021, Taliban has gained sovereignty in Afghanistan again. International society, including the United States of America (US), do not recognize the newly-established government, claiming that the Taliban did not fulfill their commitments under the Doha Agreement. Moreover, the international society is applying sanctions towards the Taliban administration. In that sense, the US blocked national reserves of Afghanistan. In the current situation, states do not make official agreements because they do not recognize the Taliban; foreign companies avoid investing in the country. In addition, drought and natural disasters cause the problems in the country to deepen.
As it is known, Afghanistan’s economy has been built on foreign aid for the last two decades. When these aids decreased, the country came to the brink of economic collapse. Indeed, the humanitarian situation is getting worse. The International Labor Organization (ILO) claimed that five hundred thousand people lost their jobs after the Taliban took control of Afghanistan and that this number would rise to one million by the end of 2022. The United Nations Development Program (UNDP), on the other hand, claims that twenty million people in Afghanistan are at risk of starvation.  It is seen that some people sell their kidneys due to unemployment and poverty. In addition, suicides among people have increased.
While economic and social problems deepen in Afghanistan under the Taliban; it is noteworthy that the national currency of the country, the afghani, did not depreciate against foreign currencies and especially against the dollar. As a matter of fact, in a post on his social media account, Taliban Spokesman Zabiullah Mujahid stated that 1 US dollar equals 87 Afghanis. It is seen that this has decreased to 85 Afghanis in recent days. It is remembered that in the beginning of the second Taliban era, 1 US dollar was equal around 80 Afghanis. Based on these data, it can be said that there has not been a serious depreciation in the Afghan national currency in the last year. However, the Pakistani Rupee, which is the neighbor of Afghanistan, is rapidly depreciating against the dollar.
There are many reasons for maintaining the value of the afghani against foreign currencies. The first of them is the hot money sent by the international community as humanitarian aid. According to the data of the Central Bank of Afghanistan, since August 2021, the international community has sent approximately $1.3 billion in humanitarian aid. The money first enters the International Bank of Afghanistan (AUB), and then it is converted into Afghan money and distributed to the Afghan people either directly or by purchasing food and clothing. For instance, US Special Envoy to Afghanistan Tom West announced that his country is sending $1.1 billion in humanitarian aid to Afghanistan. Especially after the Washington administration announced that international organizations and non-governmental organizations would not impose sanctions on humanitarian aid to Afghanistan, many organizations started to send aid to Afghanistan, again. In recent days, the international community sends an average of 40 million dollars a week to Afghanistan. This ensures that the country’s currency maintains its value.
Another reason is that the Taliban avoid or cannot print money. As a matter of fact, it is known that the Central Bank of Afghanistan has not printed money in the last year. Because when unbacked money is printed, the value of the dollar will increase. The Taliban enforces the use of Afghan money in the market. In other words, there is a shortage of Afghanis in the Afghan market and the Taliban approves the use of old coins. In addition, the increase in prices in the country due to the decrease in Afghanistan’s foreign trade is another factor that causes the Afghan currency to maintain its value. The price of food products has doubled since the Taliban dominated Afghanistan. For example, before August 15, 2021, the price of 50 kg of flour was 1200 Afghanis; currently it is 2500 Afghans. However, the country does not need the dollar much as the other states reduce the trade volume with Afghanistan.
Contrary to the Taliban’s limitation of public spending and the overthrown regime; The fact that taxes and revenues are transferred directly to the treasury also causes the value of Afghan money to remain constant. In addition, the Taliban warns employees at the Shahzade Market, known as the Afghanistan Stock Exchange, to keep the dollar’s price stable.
The main reason for the appreciation of the Afghan currency against the dollar in recent days is the negotiations between the USA and the Taliban. In the past, the US Treasury Department announced that it would transfer $3.5 billion of the country’s national reserves to an Afghan Fund established in Switzerland to ensure economic stability in Afghanistan. Another remarkable development is the meeting of the US and Taliban delegations in Doha after the murder of Al-Qaeda leader Ayman Al-Zawahiri. In this sense, the American media claimed that David Cohen, Deputy Head of US Intelligence, and Abdul Hak Vasik, the Head of Intelligence of the Taliban, met in the capital of Qatar. Neither side denied the news. Therefore, it is considered that the meeting took place. These contacts have added value to Afghanistan’s economy.
The establishment of the Afghan Fund and the meeting between the US and the Taliban created an impression that the parties could approach each other more realistically and take concrete steps towards the solution of the Afghan Problem. According to the Washington administration, although the Taliban dominate the entire country, they cannot solve the problems in Afghanistan alone. For the Taliban, the US is the world’s superpower and the problem of recognition cannot be overcome without reconciliation with Washington. The fact that these two perspectives pushed the parties to negotiations had a positive effect on the Afghan market and led to the appreciation of the Afghan currency.
As a result, against the other currencies, there are many reasons why the Afghan currency has been protecting its value. Humanitarian aid from the international society, including the US, is primary reason of this. Because, the West is protecting shortage of dollars in the market thanks to the aids. This causes Afghan Money to stabilize.
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