Afghans stand in queues to withdraw savings from banks amid soaring consumer prices

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Two weeks ago, the change of power took place in Kabul. The Taliban took control over the country's capital on August 15. This happened due to the successful advance of the militants in the Afghan provinces. The Taliban did not face any serious resistance. President Ashraf Ghani hastily left his residence and later the country.

After that, the government of the US and some other countries decided to evacuate their citizens and the Afghans who directly or indirectly cooperated with western services and the military. The UK completed the evacuation of its citizens on August 28. A bit later, on August 30, the US also evacuated all its citizens from the Afghan territory.

Today, in Afghanistan, there are long queues near banks as prices of various goods are skyrocketing and people are trying to withdraw their savings. The invaders got a territory with a frightened population and serious economic difficulties. A nosediving national currency and soaring inflation are deteriorating the already awful situation.

When NATO representatives were in Afghanistan, more than one third of the population might spend on food just $2 a day. Today, the situation has become even worse. Tomatoes, which not so long ago cost 50 afghanis, today could be bought at the price of 80 afghanis. Even for well-off residents of the country, the daily struggle for food is becoming more and more unbearable. The fact is that people have not received wages for several weeks, and many shops, offices, and banks are still closed. To revive the economy, the Taliban orders the local banks to open their doors to the population. However, people can withdraw only a limited sum of money a week. As a result, every day thousands of people are trying to withdraw at least a small part of their savings.

The weather condition also poses problems to the Afghans, who depend on the agricultural sector. A severe drought has hit the farmlands. As a result, thousands of rural poor people moved to the cities in search of shelter, water, and food. Tents at the roadsides and in parks and people exhausted by hunger and thirst have become commonplace in Afghanistan in recent days.

The economy of Afghanistan was previously based on cash and on the import of food and basic necessities. In the light of recent events, the country has lost foreign aid, estimated at billions of dollars. That is why the local currency turned out to be under mounting pressure. Until recently, the afghani was valued at $93-95, and shortly before the fall of Kabul, its price slumped to $80. The Afghan currency has now become so unstable that it is impossible to evaluate it. Some traders suppose that once the exchanges in the country reopen, the Afghan national currency will jump above $100.

As a result, prices of many basic food products continue growing every day. A bag of flour in the Kabul market weighing 50 kg could be bought by 2,200 afghanis, that is, 30% higher compared to the period before the capture of the city by the Taliban. The price of vegetable oil and rice has also soared. Vegetables have risen in price by as much as 50%, and gasoline – by 75%. The population was at a dead end as wages disappeared, and it became impossible to extract any savings from banks.

Money transfer operators, such as Western Union, are closed. That is why any money transfers from abroad are not available to local residents. People rushed to sell the jewelry and even ordinary household goods. However, most people simply do not have the opportunity to buy goods. As a result, people have to sell goods at very low prices.

Taliban officials assured the population that the new government will help solve the existing difficulties and establish new economic relations with other countries.

A new head of the central bank has already been appointed in Afghanistan. However, bankers outside the country have stated that it will be extremely difficult to restore the financial system without specialists, who have already left the Afghan territory. All technical personnel, including senior financial management, have left Afghanistan. In addition, the Taliban banned the export of dollars.

Curiously, about $9 billion in foreign currency is stored outside of Afghanistan. Although the country desperately needs money, the Taliban is unlikely to get access to these assets. This reserve is still not available for people. The Taliban government has never been officially appointed. What is more, it has not been recognized by other countries.

The material has been provided by InstaForex Company - www.instaforex.com

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