Taliban ban US dollars in Afghan economy amid cash crunch

Money changers sit at the currency exchange market along a road in Kandahar on Sept 20, 2021. (JAVED TANVEER/AFP/BLOOMBERG)

The Taliban government has banned the use of foreign currencies in Afghanistan in a surprise move that could weigh on an economy struggling with a cash crunch and further isolate the country.  

The move came as the Taliban were pushing for the release of billions of dollars of reserves overseas, which was frozen by the US and its Western allies since the group swept into the power in August. Without these reserves, Afghanistan has been effectively shut out of the international financial system. 

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The use of foreign currencies has negative effects on the country’s economy. Violators will be dealt with legally.

Zabihullah Mujahed, spokesman, Taliban 

The group has ordered the public, including shopkeepers to businessmen, to conduct all trade in afghani currency for the sake of national interests and to help the economic situation, said Taliban spokesman Zabihullah Mujahed. 

"The use of foreign currencies has negative effects on the country’s economy,” he said in a statement. “Violators will be dealt with legally.” 

It is unclear how the Taliban will enforce this ruling given that Afghanistan’s economy has been propped by US dollars for more than twenty years. Two-thirds of Afghan banks’ deposits and half of the country’s national loans are in US dollars.  

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The greenback is preferred over the local afghani to pay for imported goods and services as well as big-ticket transactions such as buying a home or paying for private school tuition. The ban could also complicate humanitarian aid from overseas, which will be crucial for the country as a harsh winter approaches.