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Afghani falls to record low amid pressing currency shortage

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Economists are warning of an acute currency shortage in Afghanistan and the subsequent economic predicament as the Afghani has plummeted to its record low in trading.

The United Nations Development Programme (UNDP) issued a report earlier this week urging prompt actions to prevent the Afghan banking system from collapsing, which is now “in disarray” featuring inadequate liquidity and decreased deposits.

The largest currency exchange market in Kabul now has been crowded with people and the Afghani has dropped to its all-time low.

Before the Islamic Emirate of Afghanistan (IEA)’s takeover of Kabul in mid-August, one U.S. dollar was equal to about 70 Afghanis. But now the exchange rate hovers around 90 Afghanis to the dollar. The continued depreciation of the Afghan currency sparked fears among residents, with many flocking to the exchange market.

“Unfortunately in these two weeks the Afghan currency has been dropping down against foreign currencies with one dollar costing 95.5 Afghanis last week. Then the Afghanistan Bank released a statement that they will put 10 million U.S. dollars into the market, more than the 2.5 million dollars they actually took out. However, the price [of the U.S. dollar] didn’t go down but unfortunately have increased day by day,” said Zirak, spokesman from the all money dealers of Afghanistan.

Zirak said the country’s currency shortage was fueled by the combination of its assets frozen by the United States, the increasing domestic demand for U.S. dollars, as well as banks’ restrictions on dollar withdrawal.

The UNDP report noticed that non-performing loans in Afghanistan had increased from around 30 percent at the end of 2020 to 57 percent in September this year.

With the current trend and withdrawal restrictions, approximately 40 percent of the country’s deposit base will be lost by the end of 2021, said the report.

The currency shortage also comes along with rising prices. Some residents and businessmen in Kabul said that the prices of major commodities, such as food and fuel, have almost doubled compared with last year.

A Kabul resident is calling for the U.S. to release the frozen assets to save people’s lives.

“The U.S. blocked the money of Afghanistan, leading to the economic downturn. The poverty rate has reached its peak and people will die, so we urge the U.S. to release money of Afghanistan because [if not,] sure the people will die,” said Mustafa Bahram.

 

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Afghanistan eyes direct Basmati rice imports from India amid tensions with Pakistan

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Afghanistan is exploring direct imports of Basmati rice from India as it seeks to diversify its supply sources amid ongoing tensions with Pakistan, according to a report by The Hindu.

The report said Indian exporters and Afghan importers are expected to meet next month to discuss expanding direct trade in Basmati rice, following preliminary talks between officials from both countries held last week with the facilitation of the PHD Chamber of Commerce and Industry.

Afghanistan consumes nearly 500,000 tonnes of Basmati rice annually and has traditionally relied on imports from neighboring Pakistan. However, industry sources told The Hindu that recent strains in Afghanistan-Pakistan relations have encouraged Kabul to seek alternative suppliers, including India.

Representatives of Afghanistan’s diplomatic mission in New Delhi reportedly took part in the discussions and expressed interest in increasing purchases of Indian Basmati rice. At present, some Indian rice reaches Afghanistan indirectly through traders in Iran and Dubai, a route that adds to transportation and transaction costs.

One proposal under consideration is to transport rice through Iran’s Bandar Abbas Port, subject to agreements between the two governments. The discussions are also expected to cover logistics, payment mechanisms, and the possibility of barter trade, with Afghanistan’s dried fruit exports to India seen as a potential component of future trade arrangements.

According to The Hindu, a direct trade arrangement could help India expand its share of Afghanistan’s Basmati market, which has historically been dominated by Pakistani suppliers.

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Afghanistan, Kyrgyzstan establish trade council to boost economic cooperation

The two sides signed a memorandum of understanding to establish the Afghanistan-Kyrgyzstan Trade Council.

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The Embassy of the Islamic Emirate of Afghanistan in Kyrgyzstan says the Afghanistan-Kyrgyzstan Business Forum has been held with the participation of officials from both countries.

According to a statement issued by the embassy, Acting Ambassador Abdul Shakoor Haqqani said Afghanistan supports strengthening bilateral trade relations and promoting joint economic initiatives between the two countries.

The statement added that the two sides signed a memorandum of understanding to establish the Afghanistan-Kyrgyzstan Trade Council. The council aims to strengthen ties between business communities, coordinate joint initiatives, and expand and support economic projects.

Meanwhile, Sayed Karim Hashemi, Chairman of the Afghanistan Chamber of Commerce and Investment, arrived in Kyrgyzstan on Saturday at the head of a trade delegation to participate in the forum.

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Afghanistan invites Turkish investors to expand joint investments

Participants stressed the importance of increasing private sector cooperation and creating new opportunities to boost trade and investment between Afghanistan and Türkiye.

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A high-level Afghan business delegation, led by the Chairman of the Balkh Chamber of Commerce and Investment, Mohammad Ibrahim Ghazanfar, participated in the Afghanistan–Türkiye Joint Business Council meeting in Istanbul, calling for expanded joint investment and stronger economic cooperation between the two countries.

According to a statement from the Balkh Chamber of Commerce and Investment, Ghazanfar invited Turkish investors and industrialists to explore investment opportunities across various sectors in Afghanistan, emphasizing the country’s potential for mutually beneficial partnerships.

The meeting brought together business leaders, investors, and private sector representatives from both Afghanistan and Türkiye to discuss ways to strengthen bilateral trade and economic ties.

During the event, several cooperation agreements were signed between Afghan and Turkish economic institutions. The agreements are aimed at expanding commercial relations, promoting joint investment projects, and enhancing economic cooperation between the two countries.

The meeting was chaired by Süleyman Güllü, Chairman of the Türkiye–Afghanistan Joint Business Council, and was attended by Mohammad Akbar Azimi, the Islamic Emirate of Afghanistan’s Consul General in Istanbul, along with a number of businessmen and investors from both countries.

Participants stressed the importance of increasing private sector cooperation and creating new opportunities to boost trade and investment between Afghanistan and Türkiye.

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