While the Pakistani rupee grapples with a persistent struggle against themighty US dollar, recently surpassing the daunting Rs300 benchmark, aneighboring nation paints a vastly contrasting economic landscape.According to a recent report by the World Bank, the Afghan Afghani,Afghanistan’s native currency, has exhibited a remarkable surge in valuewhen measured against most other global currencies, a phenomenon that hastranspired since the initiation of the current fiscal year.
What sets the Afghan economy apart from the global norm is its peculiarexperience of negative inflation or deflation, with overall inflationhovering at a staggering -9.1%, and food prices plummeting by a substantial12%.
Despite these extraordinary economic conditions, the Afghan Afghani hasmanaged to strengthen its position in comparison to stalwart currenciessuch as the US dollar, the Pakistani rupee, the Chinese Yuan, and the Euro.
The report attributes this remarkable Afghani resurgence to a confluence offactors. One of the pivotal drivers is the gradual increase in remittancesfrom Afghan citizens living abroad, which tallied an impressive $1.04billion during the initial six months of the year.
Moreover, the Afghan government’s imposition of a comprehensive ban onconducting transactions within the country using foreign currencies hassubstantially diminished the demand for such currencies, preventing theirmanipulation through trade.
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Further bolstering the currency’s resilience is the Afghan Talibangovernment’s strategic implementation of transaction limits, effectivelycapping the amount individuals and businesses can withdraw from banks.
These limits, initially set at AFN 30,000, were raised to AFN 50,000 forindividuals and saw an even greater adjustment for companies, raising theirlimit from AFN 2.5 million to AFN 4 million. By confining transactionswithin these boundaries, the government successfully encouraged morecapital to remain within the banking system, thereby contributing toeconomic stability.
Lastly, the report underscores the absence of a parallel currency system inAfghanistan’s foreign exchange market, describing it as ‘balanced.’ Thisequilibrium ensures that the Afghani maintains a stable and uniformexchange rate across the country, free from the perils of hoarding or blackmarket activities. This unique environment adds yet another dimension tothe Afghan Afghani’s remarkable ascent against the backdrop of a complexand challenging economic landscape