By Paul Wiseman
USA Today
July 24, 2002
KABUL, Afghanistan - The central bank of Afghanistan has decided there's only
one thing left to do with the country's pitiful currency, the afghani: Get rid
of it and start over.
In an ambitious campaign that will test the new Afghan government's authority
over warlords who print their own cash, the bank will roll out a new currency
in about three months.
After losing 99.9 percent of its value over the past 30 years, the old afghani was due for a financial mercy killing. These days, it takes more than 40,000 afghanis to equal $1, up from 25 to the dollar three decades ago.
The currency is worth so little that it has to be printed in notes each worth 10,000 "afs," and it still takes dozens of those bills to buy a small sack of groceries.
"Ten thousand afghanis are worth 25 cents," says Anwar ul-Ahady, new governor of the Afghanistan Central Bank. "So you have bundles and bundles of money that can't buy anything."
Afghan officials have said they plan to cut three zeros off the exchange rate, as well as the face value of the notes, suggesting the new currency will trade at about 40 to a dollar.
Like just about everything else in this country, the afghani is the victim of poverty, bad government, warfare and warlords.
A new currency means taking on warlords who now print their own version of afghanis to finance their armies and lifestyles, debasing the value of the nation's currency in the process.
A particular culprit has been former President Burhanuddin Rabbani, a leader of the Northern Alliance that helped the U.S. force the Taliban militia out of power last fall.
When the Taliban drove Rabbani from the capital Kabul in 1996, it took control of the central bank.
But the Talibs largely ignored monetary policy.
Rabbani continued to control the Afghan currency through an agreement with a Russian printing company.
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