DAB: Afghani losing value due to political tension

Monitoring Desk

KABUL: The Afghanistan Central Bank on Monday said its foreign exchange reserves had increased by $500,000 but the Afghanistan currency continued to lose value due to ‘political tensions’ in the country.

One US dollar was sold for 66 afghanis in January last year but today (Monday), one US dollar is sold for 70.30 afghanis.

Khalil Seddiq, head of Afghanistan Central Bank or Da Afghanistan Bank (DAB), told a meeting here that political tensions had ‘80 percent’ role and increase in government expenditures 20 percent role in the loss of afghani’s value. He did not explain the political tensions, but called for their solution as soon as possible otherwise the economic situation of the country would be affected.

Tension between President Ashraf Ghani and Balkh governor Atta Mohammad Noor surfaced in late December, 2017 when Noor was replaced with Eng. Mohammad Daud as new governor of the province.

However, Noor, also the executive chief of Jamiat-I-Islami, refused to quit his job. Negotiations are currently ongoing between Jamiat-I-Islami and the government on the matter.

First vice-president, Gen. Abdul Rashid Dostum, who has been in Turkey, was recently denied entry into Afghanistan for a second time by the government, further fueling the tension. The DAB head said that the bank offered $462 million to the market since December to boost the afghani currency value against foreign currencies.

“It is not DAB’s goal to determine currency rates in the market, we are following the open market policy based on the Constitution, it means that the performance of the market determines the currency rate,” he said.

He said the central bank last year had good achievement as it increased the foreign exchange reserves by half a billion US dollars and currently the country’s currency reserves stood at more than $8 billion.

Seddiq said the inflation rate had been 3.08 in Afghanistan last fiscal year, far down compared to neighboring countries. The inflation rate in Pakistan was 4.6, in Iran 9.6, in India 4.8 and in Turkey 11.8 last year, he said.