Afghanistan’s Taliban has banned the use of foreign currency

The Taliban have placed a ban on foreign currency use in Afghanistan, a move that could further destabilise the country’s already shaky economy. 

The Taliban went on to say that “the country’s economic situation and national interests demand that all Afghans use Afghani cash in all of their transactions.”. Following the Taliban’s takeover, international financial backing was withdrawn, causing the economy to suffer. In Afghanistan’s markets, the US dollar is frequently used. Dollars are also widely utilised for trade in Afghanistan’s neighbouring countries, such as Pakistan.

“All residents, shopkeepers, dealers, businesses, and the general public are instructed by the Islamic Emirate to conduct all transactions in Afghanis and strictly desist from using foreign currency,” Taliban spokesperson Zabihullah Mujahid stated in an online statement.

The US Federal Reserve and European central banks froze billions of dollars of Afghanistan’s offshore assets after the Taliban took control of the country in August.

In the midst of a serious cash shortage, the Taliban has called for the release of Afghanistan’s assets kept abroad. The withdrawal of international aid has also hurt Afghanistan. Grants from other countries formerly covered three-quarters of the country’s governmental spending.

The International Monetary Fund (IMF) announced earlier this year that Afghanistan would no longer be able to use its resources, and the World Bank likewise stopped sponsoring projects in the country. The IMF warned last month that the country’s economy might contract by 30% this year, putting millions of people in poverty and generating a humanitarian disaster. Afghanistan’s economic troubles, according to the fund, could spark a refugee catastrophe that would affect neighbouring nations, Turkey, and Europe.

A severe drought has also hit the region, destroying much of the country’s wheat crop and driving up costs. Millions of Afghans may suffer famine as a result of a combination of drought, violence, and Covid-19, according to the United Nations World Food Programme. Despite their claims that they want to avoid a humanitarian disaster in Afghanistan, Western powers have refused to recognise the Taliban authority.