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Taliban bans foreign currency

Date: 09 November 2021 Tags: Miscellaneous


The Taliban has banned foreign currencies in Afghanistan amidst financial crisis grappling the country.



The move is expected to further increase the disruption to the economy, battered by years of instability and fighting.



  • The Taliban has asked every Afghan to use Afghani currency in their every trade, for furthering their national interests.

  • The national currency of Afghanistan has already depreciated heavily. International agencies have already withdrawn financial support.


Reasons for ban

  • Currently, billions of dollars of Afghan currency is locked in overseas reserve. The Taliban is making efforts for releasing them.

  • Earlier, more than three-quarters of public spending in Afghanistan was financed by overseas grants. The US and other countries have suspended all grants.

  • Since the seizure of power, Afghanistan’s coffers are fast declining. The currency has been depreciating rapidly.

  • Any person or business found to have been conducting transactions in foreign currency is liable to be punished through legal actions.


Effects on Afghanistan’s economy

  • Afghanistan’s economy is currently relying heavily on US dollars. More than half of the country’s national loans and two-thirds of Afghan banks’ deposits are in US dollars.

  • Many businesses are conducted on US dollars such as paying for goods and buying homes. Ban on foreign currency will also complicate the process of receiving humanitarian aid from overseas.

  • There may be cash crunch in future as there is not enough Afghan currency for circulation. The previous government did not print local currency before the fall.


Associated problems

  • Severe droughts have destroyed wheat crops in the country, causing spike in food prices. Healthcare system is already in tatters after cut in international aid.

  • International estimates say that about 95 per cent of Afghan population will go hungry and about 97 per cent is likely to sink below the poverty line.