December 22, 2001	Saturday	Shawwal 6, 1422

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PESHAWAR, Dec 21: As afghani, Kabul’s national currency, gains ground against Pakistani rupee, US greenbacks’ flight from the Pakistani currency market through hundi is expected to get reduced, market players say.

Though afghani experienced some erosion in exchange value against rupee over the last two days due to a variety of reasons, it is expected to record improvement in its parity with the Pakistani unit in the near future.

This could make investors and currency dealers believe that American dollar’s slippage abroad via Afghanistan would also come under control.

Peshawar-based currency dealers reached by this correspondent anticipated that with afghani gaining stability, the practice of converting afghani, first, into Pakistani rupee and then into US dollar would be curbed. Strong and stable afghani would mean secure and invulnerable investment, one investor said.

If the Afghan national currency strengthened, nobody from among the big investors would be hesitant to do business transactions in afghani or maintain cash reserves in this currency, hoped another.

“At present, everybody (from among the investors) is investing in afghani, getting rid of US dollars, to reap benefit as afghani, apparently, has greater future prospects in terms of profit-earning investment,” said Naveed Ahmed, a local currency dealer doing business in Chowk Yadgar, Peshawar, the main hub of currency dealings.

He, like other dealers interviewed by Dawn, believed that investment in afghani, as of now, was a safe bet. The currency was improving and likely to get a boost in the near future. He did not favour holding of greater cash reserves in US dollar as it had lost substantial ground to Pakistani rupee, and could do so further, given the improved foreign exchange reserves, rise in remittances and financial aid being shovelled Pakistan’s way.

However, the Afghan national currency appears to be a hostage to big currency dealers and investors at present dominating the currency market by keeping alive speculative trends.

The Re 1 to 200 afghani exchange rate recorded on Wednesday last — the all-time high ever since Taliban took over Kabul in 1996 — appeared to be short-lived as on Thursday it settled at Re 1 to 232 afghani and on Friday at Re 1 to 286 afghani.

Afghani’s slide has been attributed to speculative buying triggered by big investors.

But some analysts attribute the Wednesday’s jump in afghani’s value to the fact that it was the first working day after Eid holidays.

After holding cash reserves in afghani for four closed days, the big investors started disposing of their stocks, encouraging buying on the part of small investors who apparently went for this binge in view of rising exchange value of afghani vis-a-vis Pakistani rupee, said market players.

However, as rumours hit the local market on Thursday and Friday, the rising afghani reversed course and experienced a slide in its value.