KABUL, Sept 4: Afghan President Hamid Karzai said on Wednesday his government would replace its troubled afghani currency with new banknotes in a bid to bring stability to volatile exchange markets.

The new currency, which will still be called the afghani, will be worth 1,000 of the current currency, Karzai said in an address filmed at the presidential palace and to be shown on state television.

Two planeload of the new notes have already been flown into Kabul after being printed in Germany, and the exchange with the old notes will begin soon.

“People will be proud that they will be able to use the new afghani in all corners of Afghanistan,” Karzai said.

“The new money will have value and in the exchange markets it will be stable and credible.”

Dealers at Kabul’s unofficial Shahazada money exchange market gave the move a warm welcome, predicting it would be a major stabilising factor.

Karzai said Afghan and foreign experts had been debating for the past eight months how best to reduce the large amount of money currently in circulation.

There are three versions of the afghani in circulation which are legal.

One version of the note which is in use in northern Afghanistan is worth just a half of the currency which is used in the rest of the country.

Another note in use in a small corner of northeastern Afghanistan dates back to the time when the region remained in the hands of the Northern Alliance while the rest of the country was ruled by the Taliban.

“The new banknotes have been printed and have been brought to the country. They have been registered in the Da Afghanistan Bank (central bank) and are ready for distribution,” the president said.

“With this decision we can control the large amount of money in circulation and take steps towards stabilizing our economy.”

The new notes will be in units of 1,000, 500, 100, 20, 10, five, two and one. They feature pictures of famous historical sites and mosques.

The operation to exchange the old notes for new is expected to last for two months. There will be at least 75 exchange points throughout the country, while Afghans will also be able to change their notes at exchange markets.

“After the exchange (process has been completed) the old money will be burnt by the Da Afghanistan Bank and will no longer be valid,” said Karzai.

Central bank governor Anwar ul-Haq Ahady told journalists the move was designed to bolster the value of the afghani. One dollar is currently worth around 40,000 afghanis but the exchange rate fluctuates markedly.—AFP