LONDON – Afghanistan’s central bank has ordered financial institutions to pay out remittances only in the local currency, the latest move to preserve scarce United States dollars, said sources familiar with the matter.
Hard currency remittances have formed an important source of external finance for Afghanistan over the years, but dollar availability has dried up in the aftermath of the Taliban’s conquest of the country.
Western Union Co’s agent banking partners in Afghanistan have received a directive from the central bank in the last few days to pay out remittances only in afghani, said a source close to a money-exchange provider.
Remittances sent before the directive and selected by the sender for dollar payouts can continue to be paid in dollars, added the source.
MoneyGram International Inc said it is paying out only in afghani, without elaborating further.
Both resumed money-transfer services to Afghanistan last week, having suspended services last month after the Islamist militia captured Kabul.
No comment was immediately available from the central bank.
Under the leadership of acting governor Haji Mohammad Idris, a Taliban loyalist who has no formal financial training, the lender has been moving to restrict dollar outflows amid a pause in foreign aid and a scramble by some Afghans to get their savings out of the country.
Further controls are expected to hasten the afghani’s depreciation against the dollar, exacerbating inflation in a country where more than a third of the population lives on less than US$2 (RM8.27) a day.
“It’s a matter of concern that the remaining physical cash of US dollars is going to reduce further,” said an Afghan banker.
“With the restrictions, we are predicting the dollar will reach more than 100 afghanis to the dollar.”
The afghani was trading at around 80 to the greenback just before the fall of Kabul on August 15.
Banks were told by the central bank last week to restrict withdrawals by corporate customers to only the local currency, capped at around 20% of each customer’s weekly operating costs, said the banker.
With around 80% of banking deposits in dollars, bankers said controls should minimise the risk of insolvency.
Since reopening in the second half of August, banks have been operating with limited services, including US$200 weekly limits on withdrawals and few wire transfers. – Reuters, September 12, 2021
