US dollars will no longer be permitted in Afghanistan, after the Taliban announced it will be completely outlawing all foreign currencies in the country.
According to a statement posted online, Taliban spokesman Zabihullah Mujahid announced that shopkeepers, traders, businessmen, and all other citizens are no longer permitted to conduct transactions in foreign currencies, and must instead use the Afghani. Mujahid cited concerns over the country’s economic situation and the Taliban’s national interests as the reasoning behind the move, warning that those caught trading in other currencies will be prosecuted.
However, it remains uncertain how exactly, the Taliban plans to accomplish such a measure, especially as trading in US dollars remains widespread across Afghanistan’ markets. For nearly two decades, America flooded Afghanistan’s economy with US dollars, and now, nearly 66% of the country’s bank deposits and 50% of its sovereign debt is denominated in the currency.
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After taking over the country several months ago, the Taliban has faced a worsening economic crisis, after vital international financial support was withdrawn in August. The US, along with the International Monetary Fund and the World Bank, cut off the Taliban’s access to over $9.5 billion in funds stored abroad, as well as banned the country from receiving international loans.
The Taliban’s decision to ban foreign currency will likely deepen the country’s worsening economic crisis, similar to what happened in Zimbabwe in 2019. The southeast African country spiralled into hyperinflationary territory, after the government unveiled the Zimbabwe dollar and banned local trading in all other currencies. Inflation subsequently skyrocketed 500% come March 2020, and hit an eye-watering 737% by July 2020.
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