Analysts say that Afghanistan is facing a catastrophic situation due to a lack of dollars and paralysis of the financial sector after the occupation of the Taliban.
ATMs in Afghanistan have already been emptied, and banks in the capital Kabul have also been closed, causing economic shock, The Guardian reported on the 22nd.
Afghanistan’s US central bank’s US$9 billion foreign exchange reserves are tied up, and as the Afghan government collapses, remittances in dollars are blocked.
As a result, the Afghan currency depreciated and the price of daily necessities began to rise.
After the U.S.-backed government was overthrown, wages for then civil servants were also stopped.
As a result, there is a warning that hyperinflation will come to Afghanistan, which is already economically devastated.
A central bank worker who fled Afghanistan last week predicted double-digit inflation.
“It is no exaggeration to say that Afghanistan’s economy relied on the regular US dollar,” said Grammy Smith, a research fellow at the ODI Institute.
The general view is that if the dollar exchange is blocked, the devaluation of the Afghan currency will accelerate, and the price will go up even more as people buy goods instead.
The remittance network companies Western Union and MoneyGram suspended services last week are also expected to have a big impact.
This is because the size of the economy remitted by Afghans working abroad accounts for 4% of Afghanistan’s annual gross domestic product (GDP).
Even before the overthrow of the Afghan government, the price of daily necessities had already risen as the COVID-19 hit.
Afghanistan’s currency depreciated sharply, from 80 Afghani to a dollar before the fall of the capital, Kabul, now rising to 86 Afghani.
The Congressional Research Service (CRS) predicts that 90% of Afghanistan’s population earns a living on less than $2 a day, and that aid from the United States will be cut off and the world’s economy will be the smallest.
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