Afghani is the name of Afghanistan Currency, which was introduced in 1925 with ISO code as AFA. Afghanistan Currency has been subdivided in to 100 pols. Since the name of Rupees was also used by India, Pakistan and Afghanistan as well. And most of the businessmen used to exchange the rupee with Afghanistan Currency as Afghani in order to run their daily business activities in free market in the past. The conversion rate of Afghani from the Rupee was sometimes quoted as 1 Afghani equal to almost 2 rupees which was equal to almost 8 grams of silver in 1930s.  

Later the exchange rates were determined by both Afghanistan Central Banks and due to supply and demand forces and by money bazaar of Kabul called Saraye Shahzada. Later the Central Bank agreed to make a policy in order to keep the Afghani Rate fixed against the Rupee or other currencies which are dealt in Afghanistan Free Market and almost 5 Afghani were exchanged into 1 Indian Rupees in 1940s.

Da Afghanistan Bank was established as Central Bank and tried to keep the official fixed rate of Afghanistan Currency against the other currencies, which were exchanged in Afghanistan Free Market and Money Baazar Saraye Shahzada. Da Afghanistan Bank also was trying to go parallel with Afghanistan Free Market exchange rates in order to keep the Afghani value fixed. The matter of official rate of Da Afghanistan Bank as central bank and Afghanistan Free Market exchange rate of Saraye Shahzada continued to be practiced and sometimes the Central Bank used to support the Afghan Free Market Exchange rate sending USD in order to sell in the market to keep the Afghani official rate balanced with Afghan Free Market rate. Finally the gap between official rate and free market exchange rate was raised till 1980 and it was during the civil war.

After the Russian forces left Afghanistan. the Democratic Republic of Afghanistan government was still trying to keep the rate of Afghanistan Currency stable later the respective government fall by Mujahidin groups and civil war was started. During the civil war years 1991 – 2001 Afghanistan was divided into many political and war regions so some parts and Kabul as capital was controlled by Mujahidin regime and some other parts of the country controlled by oppositions which each parts made their own banknotes with no regard to standardization or honoring serial numbers as called as below.

Before 2002, warlords, political parties, foreign powers and forgers each made their own Afghani banknotes, with no regard to standardization or honoring serial numbers. Such as…

• Paisa Dowlati, means Government Money 5000 and 10,000 AFN banknotes was printed by Mujahidin Government headed by Burhanuddin Rabbani was exchanged in free market + central bank as follows: Started 10,000 AFN – 80,000 AFN = 1 USD

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• Paisa Junbushi or Dostumi, means the money of only 10,000 banknote with washout color was printed by Abdul Rashid Dostum in the north of Afghanistan which was sold on the markets of Kabul at half of their value. Started 20,000 AFN – 160,000 AFN = 1 USD.

 

• Paisa “Dalya” means the money with the serial number of having the letter of “D” and “Y” ی and د were printed of 10,000 banknote and reached to Afghanistan free market with no guarantee and both the Mujahidin Government and Dostum (the north alliance) did not have guarantee this money. This Dalya money named by the public and both Mujahidin and Dostum Regimes announced to arrest the dealer of Dalya money and introduced to Attorneys for further legal actions.  

After 2002, the new Afghanistan Currency issued by the new government of Afghanistan leaded by Hamid Karzai and replaced the former Currency 5000 and 10000 notes at two distinct rates, which the Paisa Dowlati means the Mujahidin Government money were replaced at a rate of 1000 to the 1 new Afghani and Paisa Junbushi means the money printed by Dostum (northern alliance) were replaced double rate of Government money as 2000 to the new Afghani and finally more than 20 trillion Afghanis had been burned after collection from the public.

So the new Afghani was introduced with no subdivisions with the ISO 4217 code AFN and during 2002 – 2003 and the exchange rate was 43 against 1 USD.

The Afghanistan Currency exchange rate vis-à-vis the USD since 2002 has been increasing 1 USD 43 into 52.30 by today December, 30, 2012.

However, Da Afghanistan Bank has already announced, that nobody is allowed to use any foreign currency in Afghanistan free market and even President Karzai has already officially commanded, that “all budgetary units of Afghanistan should do their payments in AFN”.

Norullah Dilawary General Director of Da Afghanistan Bank stated in a press conference in November 13, 2012 that, “Decreasing rate of Afghani against USD doesn’t have economical factor because the level of Gross National Product GNP has been reached in to 7.1% however it was 3.5% last year, but it is only because of the illicit transportation of Currencies from Afghanistan to abroad”. also he added, “level of inflation in Afghanistan has been recorded 5.4% in current year whereas this level was 11% in last year”. Also we had collected 6 billion USD last year and 7 billion have been recorded in current year. According to Da Afghanistan Bank's policy, they want to import the foreign money in free market to keep the value of AFN with USD balanced and finally he added,” illicit transportation of money from Afghanistan to abroad is the Non Compliance of Afghanistan respective Law”.

Last but not least, however Afghanistan Currency has the above challenges, but Afghanistan Currency compared with the last decade currency is much better and all people of Afghanistan are using and it has been already recognized by ISO 4217 Code AFN. So now it is up to us take part in economical improvements of Afghanistan and understand this point that how to keep and protect Afghanistan Currency in order to bring further economical prosperity.  

Written by: Sadaqatullah Sadiq   on / December, 31, 2012.