Mumbai: Afghanistan’s currency has emerged as the world’s best performing unit in the September quarter, rallying 9 per cent during the three-month period and 14 per cent so far this year amid foreign aid flows and the US releasing funds to the war-torn country.
At Tuesday’s exchange rate, an Afghan Afghani is worth Rs 1.06 and 78.54 against the US dollar. The mostly agrarian economy of the now Taliban-ruled Afghanistan had tanked almost 30 per cent, and its currency had dropped to 124.2 against the US dollar on August 16, 2021.
On August 14, the local currency quoted 80.96 against the greenback, according to a currency analyst at HDFC Securities told PTI.
The analyst did not want to be named as the brokerage does not track the Afghan currency since the current Afghanistan regime has stopped sharing data.
According to a recent World Bank report, the economy steeped in unemployment and abject poverty of the vast majority is now facing deflation. On the back of foreign exchange inflows, the Afghani has rallied from 85 to the US dollar in early August to 73.38 on August 31 — its best-ever show since the Taliban takeover.
Since then in September, the unit lost the sheen by 6.5 per cent and closed at 78.54 on Tuesday, according to HDFC Securities. Despite the fall, the Afghani was the best performing currency across the world in the September quarter, gaining 9 per cent in the quarter and 14 per cent year-to-date, according to Bloomberg data quoted in a section of the media. There is no liquidity in the Afghani market, and the rally should be a one-off event and does not look like it will last, the analyst said.
According to the analyst, the major reason for the massive rally in the unit, which mostly happened in August, was due to the resumption of the UN and other international agencies’ aid to the war-ravaged country.
Also, the US releasing USD 280 million out of the USD 8 billion of frozen funds since the Taliban takeover has helped in the currency appreciation, the analyst added. Recently, the US Treasury Department said it would transfer USD 3.5 billion more of the frozen funds to an Afghan fund established in Switzerland to ensure economic stability in Afghanistan.
As per reports, the 9 per cent rally of the Afghani has outpaced the Colombian peso’s 3 per cent gain. Another unit that gained is the Sri Lankan rupee.
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