Afghani gains ground against dollar but commodities prices remain unchanged

Afghanistan’s currency has recently experienced a significant increase in value against the US dollar but the expected decrease in commodity prices in local markets has yet to materialize.

Over the past week, the exchange rate for one US dollar has fluctuated from around 75.5 Afghans to 73.5 and 73.8 Afghanis.

Some currency exchange professionals attribute the rise in Afghani’s value to a lack of liquidity, emphasizing that many people in the border provinces of Afghanistan, neighboring Iran and Pakistan, are now using Afghanistan’s currency.

Obaidullah, a money changer, explained, “All the people abandoned the Pakistani rupees and the Iranian Rials and switched to using the Afghan currency. That’s why the Afghani rate is increasing.”

“On Wednesday, one hundred American dollars were equivalent to 7,570 Afghanis, but today, on Saturday, it is 7,420 Afghanis,” Najibullah Saraf, another money changer, noted.

However, residents of Kabul have reported that the increase in the Afghani’s value against the dollar has not led to a corresponding decrease in the prices of goods, as commodities continue to be sold at higher prices than expected.

Fraidun, a Kabul resident, remarked, “Last year, the dollar was high, and this year it is low, but there has been no change in the price of goods.”

Nisar, another resident of Kabul, shared, “For example, I bought this oil for 639 Afghanis, and now I sell it for 550 Afghanis. It is not possible that I buy the dollar at 80 and sell it at 75.”

Shopkeepers have indicated that the prices of some food and goods have decreased by 10% following the rise in the value of the Afghani currency. However, they contend that wholesalers have not adjusted the prices of goods in proportion to the dollar’s fluctuations.

Nik Mohammad, a shopkeeper, explained, “If we bought and sold in Afghanis, the price would not change, but we buy in dollars.”

Over the last four months, the Afghani has strengthened, with an increase of 800 to 1300 Afghanis per one hundred dollars.

Previously, Bloomberg reported that the Afghani currency has become the top performer globally, with a nine percent growth, surpassing the currencies of Colombia and Sri Lanka to secure the first position worldwide. This growth is considered unusual for a country like Afghanistan, characterized as one of the world’s poorest nations with a dire human rights record.