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Afghan Afghani Executive Summary (AFN)

Country Overview

Foreign Exchange

The Central Bank of Afghanistan is responsible for maintaining domestic price stability, creating a stable market-based financial system and creating sustainable economic growth.

The AFN depreciated 5.7% against the USD in the first half of 2015, continuing a downward track since 2011. Among other factors, declining demand for Afghanis during that time period resulted in downward activity from diminishing political and security situations.

Credit Rating

The Islamic Republic of Afghanistan is not currently rated by S&P, Moody’s, or Fitch Ratings.

Inflation Rate

The December 2015 inflation rate for the Islamic Republic of Afghanistan is reported at .08% by the Central Statistic Organization. In perspective, the Republic averaged 4.02% in the years 2005 until 2015, with a historic high of nearly 14% in April 2011.

Growth Outlook

As a result of downward pressure caused by dwindling revenue, and due to decades of Taliban occupation and sectarian infighting, the economic recovery of Afghanistan has faced an uphill battle. Shortages in civilian necessities such as clean water, food and jobs, and governmental shortcomings including corruption, security issues, and weak infrastructure have resulted in the nation being largely dependant on international help.

Despite these pressures, with the Taliban ouster in 2001 the Afghan economy has seen slow but steady gains. GDP grew a promising 6.40% in 2014 year over year as reported by the Central Statistics Organization of Afghanistan. This number is a healthy increase from the record low of 2.9% as reported in 2009.

Government and Trade

While transitional issues continue to dog Afghan trade prospects in the wake of insurgency and civil war, the continued influx of international aid could someday help the Afghani government and people restore their infrastructure and political stability. Blocking issues such as the lack of consistent electricity, infrastructure and roadway deterioration, and safety concerns must be addressed, in addition to the uptick of Taliban infiltration in the years since the NATO handoff of security operations to Afghani forces.

Country
Afghanistan
Currency
Afghan Afghani (AFN)
Phonetic Spelling
{afghānī}
Abbreviation
AFN

Etymology

The Afghani is the basic monetary unit of Afghanistan, equal to 100 puls (pools). The origin of the name comes from the Pashto/Farsi word afghānī, which literally translates to ‘from Afghanistan' or ‘of Afghan origin' but in this case refers to the national monetary unit/currency.

Currency History

The Afghani is the official currency of Afghanistan. An Afghani is equivalent to 100 Pul. The 1st Afghani was launched in 1925 and was meant to replace the rupee at a rate of 1.1 rupee = 1 Afghani. It is still, however, common to hear an Afghan use the word rupee when referring to the Afghani.

Afghanistan's currency history was marked with a lack of standardization, forgery, and currency revaluation. Before the US invasion in 2001, political parties, warlords, forgers, and foreign powers came up with their own tradable banknotes, with no system or standard for traders to adhere to. When the Taliban seized government control in 1996, the Taliban's central bank declared most Afghan bank notes worthless.

The Northern Alliance, however, continued to have notes printed in Russia. These were then sold in the Kabul marketplace at 50% off their value. By this time the Afghani's value depreciated sharply and by 2001, 1 USD = 73,000 Afghani.

After the U.S. Invasion and the toppling of the Taliban government, a new currency or Afghani was launched in 2002. Coins were issued in 2005 at denominations of 1, 2, 5 Afghani. Bank notes were issued in 2002 in these denominations: 1, 2, 5, 10, 20, 50, 100, 500 and 1000 Afghani. In 2005, the 1, 2 and 5 notes were swapped with coins.

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