The Taliban government has banned the use of foreign currency in Afghanistan, a surprise move that could weigh on a cash-strapped economy and further isolate the country.
The move came as the Taliban pushed for the release of billions of dollars in overseas reserves, which have been frozen by the United States and its Western allies since the group took power in August. Without these reserves, the central bank has struggled to maintain the flow of dollars into the economy.
The militant group has ordered the public, from traders to businessmen, to do all trading in Afghan currency for the sake of national interests and to help the economic situation, Taliban spokesman Zabihullah Mujahed said.
It is not known how the Taliban will implement this decision given that the Afghan economy has been bolstered by US dollars since the invasion of the United States in 2001 following the September 11 attacks. Two-thirds of Afghan bank deposits and half of the country’s domestic loans are in US dollars.
The afghani has continued to depreciate against the US dollar since the Taliban took power more than two months ago. The currency fell to a record low of 91.03 per US dollar on Wednesday after news of the ban surfaced on Tuesday.
The foreign currency ban could see the Taliban funneling more Afghanis into the economy to meet huge demand in a country heavily reliant on the US dollar, said Juma Khan, professor of economics at Bakhtar University.
“This move could also potentially appreciate the Afghan currency in the short term, as well as allow the Taliban to buy and save more dollars at a time when the country is running out of dollars,” Khan said.
Meanwhile, the Afghan central bank on Wednesday doubled the weekly withdrawal limit per bank customer to $ 400, or Afghani 30,000, to alleviate the liquidity shortage, a move that could cause residents to rush to change their holdings into dollars. Americans against the national currency.
The greenback is preferred over local afghani to pay for imported goods and services as well as expensive transactions such as buying housing or paying tuition fees in private schools. More urgently, the ban could also complicate humanitarian aid from abroad, which will be crucial for the country as a harsh winter approaches.