Overview Of Rupee Circulation In Afghanistan – OpEd


Pakistan’s currency (Rupee) has been in circulation in the markets of Afghanistan since the Soviet troops withdrew from Afghanistan and Dr. Najeebullah’s Government has been overthrown and start of the then civil tumult in the country. After the civil war was underway in late 1992 in Afghanistan, the country’s incumbent government laid off contract with the Russian firms to stop printing the Afghani notes which resulted in the Afghani to lose its value and 1 dollar was exchanged for 24,000 Afghani.

Given the ignited skirmish in the country, Pakistan considered the situation a fruitful chance to start its political interference in terms of providing financial aids to the pro-Pakistan jihadists in Afghanistan who used to fight against each other that opened a roadway for Pakistan to take over control of the country’s outright system including its economy. Warlords started printing their currencies without any formal approval and standard procedure of the state’s central bank “i.e. Da Afghanistan Bank”, therefore people living across the Durand line were forced to start their daily transactions using Pakistan’s currency (Rupee) which caused Afghanistan to be financially, economically and politically reliant on Pakistan. Ever since the Rupee has dominated the Markets of Afghanistan, however, over the last one-and-a-half-decade circulation of the Rupee has been limited to the eastern markets.

After the US and North Atlantic Treaty Organization (NATO) allies defeated in the year 2001, by then almost all the institutions were reinstated, the new Afghani currency were printed approved by the “Da Afghanistan Bank” and the international monetary standards, the country’s economy was revived with the assistance of the United State of America (USA) and the NATO-allied countries, hence Afghanistan started diverting partially from Pakistan’s economic influence. sprint in economic slowdown of Pakistan has caused the value of Rupee toppled over in the international market both against the dollar and the Afghani which is AFN 1= RS 1.99 and $ 1= RS 154.43, this fluctuation has negatively affected the ordinary lives and various local businesses in the eastern regions of Afghanistan particularly in the city of Jalalabad. 

Wholesalers, when enquired, expressed that a single piece of locket was sold to retailers on RS50, now because of the depreciation in the rate of Rupee it costs them at RS70, to increase profit margin the wholesalers need to sell the same product in the range of RS80 to RS90, due to which they lose their customers because customers are not willing to pay a higher price for a low-value product. Similarly, the credit card for mobile recharge is priced only AFN50 which is sold at Rs100, but after the value of Rupee has decreased customers are forced to pay AFN50 with Rs10 extra.

On the other hand, an ordinary jobless citizen or one having a job with a low salary is in dilemma whether to spend the earned rupees or not, if they receive the same amount of salary in rupee or save it for meeting the future needs there will be possible future economic complications in case the rate of rupee slumps.

However, a few weeks ago the governor of Nangarhar province has put forward strict rules for the shopkeepers with regards to the rupee ban and having announced that one-day ban will be imposed in case a shopkeeper disobeys the rules, therefore five shops have been shut down in Jalalabad, the capital city of Nangarhar province, as the shoppers defied using Pakistan’s rupees in their daily business.

Moreover, a campaign against using Pakistani rupee and promoting Afghani is going on in Jalalabad city and districts of the province. A special commission has been set to monitor the markets and act against violators. In the second time, shops of the rules violators would be closed for three days, and for the third time, the ban would extend to five days and for the fourth time, their license would be revoked.

Those who have suffered call upon the concerned authorities for taking serious and quick measures to curb the Rupee use, because as the rate of Rupee decreases against Afghani, people using Rupee as a daily transactional currency will face possible fallout that will be strenuous enough to thus control it. to avoid further loss, the Central Bank of Afghanistan (Da Afghanistan Bank) could preclude the circulation of Rupee in the markets of eastern Afghanistan by printing new Afghani notes, which will be thus exchanged with Rupee and the old Afghani notes by the local banks across Nangarhar and southeastern Afghanistan lapsing up to a specified time limit.

About the Author: 

*Hamayun Khan is from Afghanistan-based researcher and a final year MBA student at Punjab Technical University and can be accessed via [email protected] 

Hamayun Khan

Hamayun Khan holds an MBA in Finance and Marketing from IKG Punjab Technical University, India and is a researcher at OSCAR, an Afghanistan-based local NGO.

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