Afghanistan remittance payouts limited to local currency

Afghanistan’s central bank has ordered banks to pay out remittances in local currency only. The scarce in U.S. dollars can be preserved by this way according to the sources. Hard currency remittances had become an important source of external finance for Afghanistan. But after the conquest of Taliban, the dollar availability has dried up.

A directive from the country’s central bank, has been received by the Western Union Co’s agent banking partners in Afghanistan. This is about, to pay out the remittances in afghani only. Remittances sent before the directive can continue to be paid in dollars. MoneyGram International Inc said that it was paying out in afghani only. After the Islamist militia captured Kabul, both the services were suspended and now it has been resumed. Under the acting central bank governor, Haji Mohammad Idris, a Taliban loyalist who has no formal financial training, the central bank has been moving to restrict dollar outflows.

Afghani banker said that it is a matter of concern that the remaining physical cash of U.S. dollars is going to reduce further. With the restrictions of the pandemic, they are predicting that the dollar will reach more than 100 afghanis to the dollar. The afghani was trading at around 80 to the dollar just before the fall of Kabul. The central bank told all the banks to restrict withdrawals by corporate customers to local currency only. With around 80% of banking deposits in dollars, bankers say controls should minimise the risk of insolvency. Since the re-opening, banks have been operating with limited services, that includes $200 weekly limits on withdrawals and few wire transfers.