Afghan Currency Plunges Amid Talk of Scrapping It
KABUL, Afghanistan – Frantic moneychangers brought near-chaos to Kabul markets Wednesday, snarling traffic and bargaining furiously as Afghanistan's currency plunged amid fears that it may be scrapped.
The tumble -- 36,000 afghanis were being offered for one dollar, a 25 percent drop in value -- came a day after an International Monetary Fund official said Afghanistan may have to abandon the currency and adopt the dollar temporarily as it tries to rebuild its war-shattered economy.
Traders panicked. At Afghan capital's central market, they slapped car windows, offering drivers rates that changed within seconds.
"I give 28,000," one trader said. "Okay, 32,000 ... 35,000."
Some claimed to be offering 50,000 to the dollar, but when intrigued customers stopped, the rate went down amid heated discussions.
Wednesday's frantic moneychanging began after an IMF official in Kabul said Tuesday that the dollar might serve as a stopgap currency while Afghanistan re-establishes its central bank and introduces a new afghani -- which could take two to three years.
"The economy has to function between now and a new currency," said Warren Coats, assistant director of the IMF's monetary and exchange affairs department, suggesting the dollar as a possible stopgap.
The afghani's value is set by hearsay and, moneychangers say, by rich Afghan businessmen in neighboring Pakistan who call Kabul by phone every evening to set a trading value.
In one market courtyard Wednesday, a dense crowd of shouting, gesticulating men bargained the rate of the Pakistani rupee, another benchmark foreign currency in Afghanistan. Hundreds more thronged balconies above, leaning over one balcony's guardrail-less edge.
"Nobody gives us the right information. Every day, it is a new problem," said Matin Zulmay, trading currency at a market on Kabul's outskirts. "Some days I take home a dollar or two to my family; today I lost 200."
The chaotic scenes underscored the huge task Afghanistan faces in restoring economic stability. The afghani has soared and plunged dramatically in recent months.
The government of Prime Minister Hamid Karzai is at the same time trying to bring political stability to a nation where militia leaders hold more sway in the provinces that the government in Kabul does.
At the United Nations' headquarters in New York, Karzai asked the Security Council to broaden the mandate of the multinational peacekeeping force so it can operate outside the capital.
Doing so, he said, "will signal the ongoing commitment of the international community to peace and security in Afghanistan." He went to the world body after winning applause as a guest of honor at President Bush's State of the Union speech Tuesday night on Capitol Hill.