According to quarterly data from Bloomberg, the Afghani, with an appreciation of almost 10% against the dollar, ended the 3rd quarter ahead of the Colombian peso. French private TV channel BFM admits that this wasn’t the result of foreign exchange traders in London and New York “suddenly snapping up the currency of one of the world’s poorest nations.”
BFM comes up with other “explanations.” First, is what they claim to be the “flow” of international aid, with the UN having contributed 5.5 billion euros since Summer 2021. Second, “local currency exchange operators are seeing a return of money sent home by their compatriots abroad.” Third, “charitable foundations from Gulf countries are starting to help again.”
But there is more, something BFM calls “the orthodoxy of the Taliban’s monetary and exchange rate policies. Transfers are strictly controlled. The authorities have banned the use of any foreign currency in trade, including the rupee from neighboring Pakistan. Physical currency movements are therefore restricted, and online currency transactions banned. Under these conditions, domestic demand can only shift to the national currency.”
