In the midst of the situation caused by the “Taliban” control over it
The currency market in Afghanistan is the last hope for the country's economy
The entry of the "Taliban" into Kabul led to the freezing of the assets of Afghan banks in the United States.
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The currency exchange market in Kabul will not be indispensable at this point.
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After the Taliban took control of Kabul on August 15, it worked to secure the central currency exchange market in the country.
This market is considered the financial center of the state, where hundreds of millions of dollars are traded in the hands of traders daily.
It is similar to the stock market in terms of its hustle and bustle, while those working in it seek to find the best rates to exchange their currencies.
Of course, the "Taliban" is interested in state money, as it has tightened its grip on the financial system, while the United States has frozen $ 9.5 billion in the assets of Bank Da Afghanistan stored in the US Federal Bank in New York.
The International Monetary Fund and the World Bank stopped disbursing hundreds of millions of dollars in loans and aid to Afghanistan, which is on the verge of bankruptcy.
Given that these foreign funds support about 75% of public spending in Afghanistan, the Taliban and the country as a whole will face a major financial crisis.
The last line of defense
The currency exchange market in Afghanistan is the last line of defense against the impending financial catastrophe.
Dealers in the currency market have supported the economy over the past two centuries, even in times of crisis.
If Bank Da Afghanistan and the international community give them the support they want, they will continue to play a critical role in ensuring the continuity of trade and business and the spread of the currency throughout the country.
limited momentum
The banking sector gained limited momentum as a result of competition with money changers and the extreme poverty of the Afghan people. The first bank in Afghanistan, Bank Melli, was established in 1933, which provided rudimentary banking services such as keeping bank accounts for the elite working in the government. Bank "Da Afghanistan" was established in 1939. By the seventies of the last century, six new banks were established operating in the country, but growth remained limited as a result of the communist regime in the period between 1978-1992, when foreign trade was carried out by the state only. Which reduced the demand for bank financing for private traders. The situation worsened as a result of the civil war in the nineties of the last century. By 2002, the World Bank described Afghanistan's banking sector as "practically devastated, and outdated in terms of technology."
As a result of the banking boom, currency exchange suffered greatly and had to adapt to economic conditions and political changes.
After the fall of the Taliban movement in 2001, the development of the banking sector became an essential task of nation-building efforts.
The International Monetary Fund helped with that.
By 2010 there were 17 banks operating in Afghanistan.
Bank assets increased from $261 million in 2004 to $4.26 billion in mid-2010.
The currency exchange market also changed after 2001. When the Taliban fell, currency dealers were providing their service to an effective financial network.
The international community began development projects across Afghanistan, and had no choice but to rely on currency dealers to move funds to remote areas.
Lots of coins were injected into the central currency exchange market, which swelled from 200 stores to 400.
Following the return of the control of the "Taliban" movement, and the terrifying tension it caused to the economy, this affected currency traders in two opposite ways.
On the one hand, the deteriorating security situation will lead some to leave the market, as many have sent their families outside Afghanistan, and the deteriorating security situation has led to a decrease in investments, which is detrimental to the private sector, including currency traders.
On the other hand, conflict will create opportunities.
Although many Afghans who gathered at Kabul airport tried to escape from the country, many failed to do so.
Therefore, those who remained in the country will continue to demand imported goods.
The shipments of goods returned from Pakistan through the Torkham crossing, and of course the merchants who will carry out these shipments will need to exchange currencies in order to finance this trade.
One of the merchants working at the crossing told me, “The currency dealers will continue their work in any case.
They are waiting for the situation to improve.”
indispensable
Accordingly, currency traders will remain the indispensable party, especially since the contracts of the financial sector and some banks are now closed.
Their international financial network will ensure that Afghanistan remains connected to the world across its borders.
By taking calculated risks in unstable security and financial conditions, they will be able to provide basic banking services to millions of Afghans, and play an important role in mitigating the impact of the economic crisis.
But currency dealers cannot compensate for frozen government assets and diminished foreign aid.
If Washington wants to provide assistance to the Afghan people, it must engage in negotiations with the Taliban over the release of funds frozen in the economy.
Foreign dollars from the United States and international organizations will be vital to push the currency exchange market to resume its activities.
Navai Chondry ■ Researcher at the University of Cambridge
Currency traders will remain the indispensable side, especially since the contracts of the financial sector and some banks are now closed. Their international financial network will ensure that Afghanistan remains connected to the world across its borders. And by taking calculated risks under unstable security and financial conditions.
The currency market in Afghanistan is the last line of defense against the impending financial catastrophe. Dealers in the currency market have supported the economy over the past two centuries, even in times of crisis.
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