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Monday, 4 February, 2002, 18:22 GMT
Afghan currency 'expected to stabilise'
Kabul money exchangers
The Afghani could still settle down and survive
By the BBC's Kate Clarke in Kabul

The Afghan currency, the Afghani, has seen huge changes in value over the last few months.

Exchange rates have ranged from 12,000 to 100,000 Afghanis to the dollar, causing havoc to potential investors and customers alike.

However, the acting governor of the Central Bank in Afghanistan, Abdul Sattar, says the Bank now has the money supply under control.

Kabul man carrying firewood
Many Afghans have little money to spend

He expects the value of the currency, currently at about 40,000 to the dollar, to stabilise.

Mr Sattar says printing of new Afghani banknotes has now stopped.

The Jamiaat faction of the Northern Alliance, which headed the Afghan government of the mid-1990s and whose officials again hold several key ministries in the interim government, kept the contract to print new banknotes through the Taleban era.

Jamiaat printed money in Russia to fund the war, causing inflation throughout Afghanistan.

Mr Sattar says money already paid out to commanders was lost, but over $200m worth of Afghanis have now been handed over to the Central Bank.

Afghani rising

That is important because there were fears that such a huge sum of money controlled by one armed faction could destabilise the peace process.

The acting Governor of the Central Bank says he is confident the Afghani would stabilise now as warlords weakened and security improved.

And he says in the short term the payment of civil servants' salaries with the help of foreign currency should boost the value of the national Afghan currency.

Kabul women changing money
Women becoming economically active again

In the last week the Afghani has been steadily losing value after a visiting official from the International Monetary Fund said one option to stabilise it would be to replace the Afghani with the dollar for a short time.

The Central Bank moved swiftly to reject the option, but people who had been storing Afghanis in Pakistan began cashing them in.

At one money changer alone, I saw $13,000 worth of Afghani bank notes, a huge stack of cash.

Money changers say about 10 billion Afghanis are arriving on the markets every day.

Some of the notes are old, but others are recently printed, still wrapped in plastic.

Money changers have been asking the Central Bank to release dollars onto the market.

Even rumours that this was happening have had a small stabilising effect on the currency.

See also:

31 Jan 02 | Business
Chaos in Kabul amid currency rumours
30 Jan 02 | South Asia
Dollar could be Afghan stopgap
28 Jan 02 | South Asia
Warlords threaten Afghan stability
22 Jan 02 | South Asia
Afghan donors urged to hurry
22 Jan 02 | South Asia
Priorities for rebuilding Afghanistan
21 Jan 02 | Business
Totting up the bill in Afghanistan
15 Jan 02 | South Asia
US to unfreeze Afghan assets
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