Turbulence in Afghanistan sends its currency tumbling

Published August 17, 2021
In this file photo, a vendor counts his earnings of the day in front of a branch of the Kabulbank in Kabul, Afghanistan. — Reuters/File
In this file photo, a vendor counts his earnings of the day in front of a branch of the Kabulbank in Kabul, Afghanistan. — Reuters/File

PESHAWAR: Peshawar’s currency market has seen the Afghan currency tumble against Pakistani rupee due to tumultuous events across the border.

Currency dealers in the provincial capital’s largest currency market at Chowk Yadgar told Dawn that the exchange rate of Afghani against Pakistani rupee had been fluctuating since the Afghan Taliban made advances in Afghan cities.

“Today, we are purchasing one Afghani for Rs1.7, while its selling rate is Rs1.9,” currency trader Qari Sher Gul told Dawn.

He said earlier, one Afghani fetched Rs2.2-Rs2.3.

Though there was little activity in the market due to the rapidly unfolding situation in Afghanistan and upcoming Muharram holidays, traders insisted that it was too early to predict the future outlook for Afghani.

Dealers insist it’s too early to predict future of Afghani

Mr Gul, who has been dealing in Afghan currency for the last 27 years, said Peshawar’s currency dealers depended on the Afghan market in Jalalabad for exchange rates but that market had been closed for three to four days due to turbulence in the country.

“The actual picture will be clear when businesses reopen in Afghanistan after the settling of the dust.”

He said the Peshawar currency market had lost its previous charm of pre-9/11 days when it determined the Afghani exchange rate.

“Even those these days, most of the business took place at Torkham, which was the main entrance for Afghans to KP. The Afghan visitors often used to exchange currency after entering Pakistan instead of opting for the hassle of going to another place in the city,” he said.

The currency dealer said the Afghan notes were also sold to the dealers from Torkham.

He claimed that as the law-enforcement agencies had ordered him and others in the trade to avoid dealing in currency, they had mostly shifted towards selling prize bonds.

Mr Gul, however, said the number of people selling Afghanis was on the rise as apparently, the people feared its further devaluation due to the political instability in Afghanistan.

He said a few weeks ago, Afghani sellers were around due to the currency’s stability.

Faheem Khan, another currency dealer, told Dawn that the Afghan currency had been fluctuating since the start of the Afghan Taliban’s advances against government forces in the country.

He said the Afghan currency’s value at the start of the last week was Rs2.2-Rs2.3 but it later come down to Rs1.7 last Saturday and since then, the currency business hadn’t taken place.

“The situation will be clear when the markets reopen on Friday after Muharram holidays end. The impact of the fall of Kabul on the country’s currency will be clear once the markets reopen,” he said.

He said the Afghan currency was stable compared to the days of the 1990s chaos.

The currency dealer said the number of sellers was on the rise as perhaps, the people were trying to sell keeping the political situation in view.

“Currency exchange rate is extremely susceptible to shocks even rumours,” he said, adding that such situation sometimes resulted into panic selling as well as holders of the currency were try to offload their cash.

Another Chowk Yadgar currency trader, who did not want to be named, said the market had little Afghanis in the market as there were fewer visitors to Pakistan.

He, however, said though the rate of Afghani value was at downward spiral, its future depended on political stability.

Our staff reporter from Karachi adds: The Afghan currency fell by 50 per cent against Pakistani rupee with the fall of Kabul to the Afghan Taliban and trading in the currency came to a standstill on Monday, said currency traders.

However, the currency dealers said the suspension of trading in Afghani would have no significant impact on trading between the two countries.

“Today, Afghani has lost 50 per cent of its value and the price was equal to Rs1.20-40. Before the fall of Kabul the Afghani was equal to Rs2.10-20,” said Zafar Paracha, secretary general of the Exchange Companies Association of Pakistan.

He said Afghani had limited demand and mostly useful in areas of Pak-Afghan borders.

Mr Paracha said the suspension of trading in Afghani would have no impact as most of the trading with Kabul was done in the US dollar.

“In case of Kuwait, the old government was restored and most of the currencies were accepted by the government, but in case of Iraq, after the change of government, the currencies were changed, which caused loss to those with old Iraqi currency notes,” he said.

The currency dealers expect that Afghani would be changed after the change of regime in Kabul.

Published in Dawn, August 17th, 2021

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