Afghan central bank chief flees as currency drops

Dubai - The Afghani fell as much as 1.7 per cent on Tuesday to 83.5013 per dollar, a fourth day of decline, according to latest data.



The central bank was told there would be no more dollar shipments on Friday, which curtailed its ability to supply currency and led to more panic, acting Governor Ajmal Ahmady wrote in a Twitter thread. — File photo
The central bank was told there would be no more dollar shipments on Friday, which curtailed its ability to supply currency and led to more panic, acting Governor Ajmal Ahmady wrote in a Twitter thread. — File photo
by

Issac John

Published: Tue 17 Aug 2021, 6:04 PM

Last updated: Tue 17 Aug 2021, 6:17 PM

Afghanistan’s acting central bank governor has fled Kabul as Taliban fighters took control of the capital with the political turmoil pushing the nation’s currency to a record low.

The Afghani fell as much as 1.7 per cent on Tuesday to 83.5013 per dollar, a fourth day of decline, according to latest data. The central bank was told there would be no more dollar shipments on Friday, which curtailed its ability to supply currency and led to more panic, acting Governor Ajmal Ahmady wrote in a Twitter thread.

Ahmady boarded a military plane at Kabul airport and blamed President Ashraf Ghani and his inexperienced advisors for the country’s swift and chaotic fall to the Taliban.

“Currency spiked from a stable 81 to almost 100 then back to 86,” the central banker wrote. “I held meetings on Saturday to reassure banks and money exchangers to calm them down.”

On Sunday, the governor left the central bank and went to the airport where he saw other government leaders. More than 300 passengers were packed into his flight, though it had no fuel or pilot, he wrote.

The turmoil in Afghanistan spilled over into markets in Pakistan.

Sovereign dollar bonds due 2031 for Pakistan dropped 1.8 cents on Monday, the biggest decline since the government priced the notes in March. Pakistani dollar bonds were the biggest losers in Asia on Monday. The notes rose 0.4 cents on the dollar on Tuesday to 100.9 cents.

Nigel Green, chief executive and founder of deVere Group, said despite the news coming out of Afghanistan, there is not likely to be an immediate shockwave rippling through global stock markets. “Investors will be monitoring the Afghanistan situation carefully as it could very likely have implications down the road.”

Green said investors are currently more focused on other key factors that could impact returns.

“These include the fallout from the delta variant of Covid, concerns about peak earnings, disappointing Chinese economic data, slowing growth, and this week’s publication of the minutes of the Federal Reserve’s latest meeting which could hint at a shift in policy.”

“However, the major geopolitical turbulence triggered by the Taliban’s effective power grab will certainly be added to investors’ growing list of global issues to track as it could have longer-term implications for markets. There will be questions regarding stability in the Middle East, the global influence of the U.S. and the mounting pressure on Biden, the prospect of increasing international terror threats, and the growing dominance of China’s renminbi, ” said Green.

“One thing is clear that with a favourable regime in Afghanistan, Pakistan will benefit economically and diplomatically, ”said Piotr Matys, senior FX analyst at InTouch Capital Markets Ltd.

“A broader contagion from the latest dramatic developments in Afghanistan should be relatively limited” Afghan assets could prove attractive to opportunistic foreign investors who may assume that Afghanistan could potentially become a far more stable country going forward,” said Matys.

— issacjohn@khaleejtimes.com


More news from Business