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Taliban bans foreign currencies: Afghan economy under threat?

Since the Taliban seized power, the national currency has depreciated and Afghanistan's reserves are frozen abroad. However, Taliban spokesman Zabiullah Mujahid declared that from now on anyone using foreign currency for domestic business would be prosecuted.

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Afghanistan’s Taliban government announced a ban on the use of foreign currencies on Tuesday, threatening further disruption to an already ailing economy.

Since the Islamist group seized power in mid-August, the national currency of the Afghani has depreciated and the country’s reserves are frozen abroad.

With the economy teetering banks are running short of cash and the international community has so far refused to recognize the new government.

Read more: Taliban face dire challenges in reviving ailing Afghan economy

Meanwhile, many transactions inside the country are conducted in US dollars, and in areas close to southern border trade routes Pakistani rupees are used.

But, in a press statement, Taliban spokesman Zabiullah Mujahid declared that from now on anyone using foreign currency for domestic business would be prosecuted.

“The economic situation and national interests in the country require that all Afghans use the Afghani currency in every transaction,” he said.

“The Islamic Emirate instructs all citizens, shopkeepers, traders, businessmen, and the general public to henceforth conduct all transactions in Afghanis and strictly refrain from using foreign currency.”

The US withholds funds from Afghanistan

After the Taliban seized control of the country in August, billions of dollars of Afghanistan’s overseas assets were frozen by the US Federal Reserve and central banks in Europe.

“We believe that it’s essential that we maintain our sanctions against the Taliban but at the same time find ways for legitimate humanitarian assistance to get to the Afghan people. That’s exactly what we’re doing,” Deputy United States Treasury Secretary Wally Adeyemo told the US Senate Banking Committee.

The Taliban has called for the release of Afghanistan’s assets that are being held overseas as the nation faces a severe cash crunch.

Read more: ‘Just give us our money’: Taliban push to unlock Afghan billions abroad

One top central bank official called on European countries, including Germany to release their share of the reserves to avoid an economic collapse that could trigger mass migration towards Europe.

Courtesy: AFP with additional input by GVS