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Local currency drop worsens Afghan economic woes

By Farid Behbud (Xinhua)

16:52, July 29, 2013

KABUL, July 29 (Xinhua) -- The continuing fall of the local currency has not only worsened the Afghan economy but also dampened the Afghan spirit to rebuild their country, particularly at a time when they are preparing for the pull-out of all foreign forces in 2014. "Even now that we are still in the middle of the 2013, people are facing many financial problems,"said Abdul Aziz, 31, a Kabul resident."The afghani is losing its value against foreign currencies, particularly the U.S. dollar. Everything costs higher."

On July 24, the afghani sank to a more than 10-year low of 57. 44/57.24 per dollar. Last year at the same day, it was 51.81/51.61. In 2011, the rate was 47.60/47.40.

The recent fall of the afghani has caused concerns not only among government officials but also among ordinary Afghan people.

"It is a cause of concern for everyone, particularly for the government employees and people whose incomes are paid in afghanis, "said Sayyed Massoud, a Kabul University lecturer.

There are several reasons for the afghani dramatic depreciation over the past couple of months, Massoud said. "In Afghanistan, the summer is the season of buying dollars. The demand for dollars gets higher in summer. This yearn fall of afghani is different with the previous years,"he said.

Massoud also believed that a decline in the foreign aid was another reason for the depreciation of the afghani. "Afghanistan is exposed to the looter neighbors. They ( neighbors) bring trucks of currencies inside to loot foreign currencies from here. This situation is very hard and troublesome for Afghanistan,"Massoud said. "I disagree that the impending pull-out of foreign forces is affecting the currency market in Afghanistan," he said.

Noorullah Delawari, governor of Da Afghanistan Bank, the country's central bank, did not agree with Massoud. "In my opinion, the sharp decline of afghani against the foreign currency in the recent months is linked to the high price of dollars against other currencies. It is not only the afghani that loses its value against dollars and other major foreign currencies but other currencies as well,"Delawari said. "The value of U.S. dollars has also increased against the Pakistani and Indian rupees,"Delawari said.

The drop of afghani is also linked the illicit cash transfer from the country, Delawari said.

He said the government and the central bank are concerned over the recent fall of the afghani. "In efforts to control the situation, Da Afghanistan Bank has already taken several actions to curb the depreciation. We sell U. S. dollars to the free market on a weekly basis,"he said. "Da Afghanistan Bank, based on the monetary policy of the Islamic Republic of Afghanistan, has taken actions including allocation and distribution of dollars to exchange market, collecting afghanis and distributing securities to the private banks,"the governor said.

Even if the NATO-led forces leave Afghanistan in 2014, international financial support for the war-ravaged country will stay, Afghan President Hamid Karzai said recently.

During an international aid conference in Japan in July last year, the donor countries pledged more than 16 billion U.S. dollars in development aid for Afghanistan through 2015, Karzai said.

The U.S. and its NATO allies also promised almost the same amount to support the Afghan army and police after the pull-out of their troops.

Afghan Finance Minister Hazrat Omar Zakhilwal recently blamed the foreign media for the negative picture of Afghanistan's economic situation after 2014 -- a propaganda that has resulted in the declining value of the Afghani currency against the dollars. "The western media's propaganda has spread baseless concerns among the public over economic uncertainty that has taken a heavy toll on the Afghan currency," Zakhilwal said.

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