World

The End Of The Aghani?

January 29, 2002 / 8:30 AM EST / AP

After a few weeks of relative stability, Afghanistan's currency plunged about 25 percent against the dollar Wednesday, apparently in reaction to an international finance official's comments.

The fall in the afghani to around 36,000 to the dollar came a day after an International Monetary Fund figure's statement that Afghanistan may have to adopt the dollar as an interim currency before new afghanis are introduced - a process that could take two or three years.

The plunge pushed the usually hectic scene at Kabul's central market, the main currency trading point, into near-chaos. Streetside traders slapped the windows of cars crawling through the snarled traffic and offered rates that changed within seconds.

"I give 28,000," one trader said to a driver, who kept on moving. "Okay, 32,000 ... 35,000."

Some claimed to be offering up to 50,000 to the dollar, but when intrigued customers stopped, the rate went down amid heated discussions.

In one market courtyard, a dense crowd of shouting, gesticulating men bargained the rate of the Pakistani rupee, another benchmark foreign currency in Afghanistan, while hundreds more thronged balconies above, leaning over one balcony's guardrail-less edge.

The afghani's value is set by hearsay and telephone calls from figures whom currency traders call "these men," said to be Afghan businessmen working in Pakistan. According to the traders, the men, whose names they said they don't know, make calls every night to set the trading value.

"They are some rich men who have shops," said trader Basir Rasoly. "They call here, they organize everything."

Traders said that Wednesday's rate plunge was called for after the men heard a radio report about some official saying Afghans should get rid of their afghanis and put their assets into dollars. One trader identified the official as a former head of the Afghan central bank; another said it was an official of the World Bank.

Warren Coats, assistant director of the monetary and exchange affairs department of the IMF, the World Bank's sister organization, said Tuesday that decisions need to be made in days about how to proceed until a new afghani is introduced as part of stabilizing the economy.

"The economy has to function between now and a new currency," Coats said, suggesting the dollar could do the trick.

The rate change left traders frightened at their losses and angry at the chaotic financial system.

"I bought yesterday at 28,000 (afghanis to the dollar) and today I have to sell at 36,000. I'm losing a lot of money," said Rasoly.

Matin Zulmay, trading currency at a market on Kabul's outskirts, said he had lost some dlrs 200 by midday.

"Nobody gives us the right information. Every day, it is a new problem," said Zulmay. "Some days I take home a dollar or two to my family; today I lost 200."

The afghani has soared and plunged dramatically over the past several months. It had been about 73,000 to the dollar in the weeks after the Spt. 11 attacks on the United States, then surged to 23,000 when the Taliban abandoned Kabul in November and leveled off at 28-30,000 in January.