USD/AFN Hits Record High as US Freezes Afghan Assets After Taliban Seizes Kabul
Afghanistan, Taliban, USD/AFN, Federal Reserve, Kabul – Talking Points
- Biden Administration freezes Afghan gov’t assets held in US banks
- US Dollar shipments to Afghanistan were halted last week
- USD/AFN jumps from 80 to 86 as Kabul falls into the hands of the Taliban
US Government officials announced on Tuesday that they had recently frozen billions of dollars that the Afghan government had stored in US bank accounts, blocking the funds from being used by the Taliban. The decision was made after the Treasury Department consulted with the State Department, with Treasury Secretary Janet Yellen giving the measure the green light. An anonymous official speaking on behalf of the Biden administration noted that “Any Central Bank assets the Afghan government have in the United States will not be made available to the Taliban." This all comes after the Biden Administration halted shipments of US Dollars to the country as the Taliban closed in on Kabul.
Afghanistan is one of the poorest counties on earth, with the Afghan central bank having just $9.4 billion in reserves as of April, according to the International Monetary Fund. According to administration sources, much of those reserves are held overseas, with billions being held in US bank accounts. Nearly 80% of the Afghani budget is funded by the US and other international donors, highlighting the fragility of the situation at hand. With the expectation that billions in aid may also cease to flow to Afghanistan, the future of the domestic economy remains on a knife-edge.
USD/AFN Daily Chart
Chart provided by TradingView
Central Bank Acting Governor Ajmal Ahmady noted in remarks that the move by the US to freeze Afghan assets limits the Taliban to just 0.1% of the former government’s assets. Ahmady went on to say that as the Taliban closed in on Kabul, Afghan bank officials began to draw down cash piles, most notably stashes of US Dollars. By the time the Taliban had captured the first major provincial capital, Ahmady said that nearly all US Dollars had already been repatriated. The chaos surrounding the transition between governments saw USD/AFN skyrocket from an 80 handle all the way to 86.
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--- Written by Brendan Fagan, Intern
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