Central bank to auction off $10 million in bid to stabilize AFN

Afghanistan’s Central Bank (Da Afghanistan Bank) announced Monday that it would auction off around $10 million this week, in a bid to help bring some stability to the Afghan currency.

Da Afghanistan Bank (DAB) called on commercial banks, money exchangers, and companies that provide money services to attend the auction on Tuesday.

The development comes a day after the Afghani lost significant value against the US dollar, dropping to its weakest since 2003 when new Afghani banknotes were printed.

On Monday, the AFN had strengthened slightly as one US dollar cost 92.95 AFN compared to 95 AFN on Sunday.

“Unfortunately, one US dollar cost 95 AFN yesterday. But today it reached 92 AFN again. This is an issue on the markets. The shortage of US dollars in Afghan markets is the main reason for the sharp drop in value,” said Abdul Rahman Zirak, a spokesman for Afghan’s biggest currency market Sarai Shahzada.

Zirak added that US dollars are being smuggled to neighboring countries which has also led to a shortage of dollars in Afghanistan.

“Unfortunately, nowadays millions of dollars are being smuggled to Pakistan and Iran so that they could sell at a higher price for greater profit. For instance, people sell dollars at a higher price and buy Pakistani rupees at a lower price and then transfer them to Afghanistan,” Zirak noted.

Afghanistan has for years been heavily reliant on the US dollar which is widely used in the country.