KABUL (SW): A staggering slid of over 6 percent in the value of Afghanistan’s currency Afghani(afn) against the U.S. dollar in a week’s time has raised doubts about the sustainability of the aid-addicted economy.
Within a week the Afghanihas dropped from 57 to 61 against a U.S. dollar by Sunday (May 24, 2015).
In eyes of the Khan Jan Alokozay, President Afghanistan Chamber of Commerce and Industry, multiple factors have contributed to bring the afn down.
“First of all, let us not forget that the afn value that was maintained for around 14 years was not a real one, it was rather an inflated one”, the leading Afghan businessman said.
“Our trade balance is extremely out of equilibrium, we import 94 percent and have exports of just around 4 percent so no wonder the currency is falling in the wake of foreign forces exit and shrinking foreign aid”, Alokozay said.
Agriculture remains the main source of export for the landlocked country limitations in resources and trade avenues undermine this sector as well.
Most of the country’s precious mineral resources that are estimated to worth trillions of dollars are still untapped and the nascent industry faces tough competition from regional giants like China, Pakistan and Iran.
For the sake of currency, De Afghanistan Bank (central bank) used to pump millions of dollars into the open market every week. According to the currency traders that amount has declined drastically, causing a panic.
President Mohammad Ashraf Ghani and his power sharing Chief Executive Abdullah Abdullah managed to form cabinet after a long eight months of political wheeling and dealing. The director for the central bank is yet to be appointed.
In the eyes of Alokozay, the worsening state of security was another major blow to trade and ultimately the capital flight from the country.
He went on to say that President Ghani and his finance team have assured them that efforts were underway to address the issues.
“We understand that the current value of afn against the dollar has been an inflated one for the past many years but what we want the government to do is not to let the value fall suddenly that would shock business community and inflict heavy losses”, Alokozay noted.
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