A senior Afghan police official regarded as one of the country’s most powerful men banned the use of the Pakistani currency in the key southern province of Kandahar.
The police chief of Kandahar, Gen Abdul Raziq, said he has declared the use of the Pakistani rupee in business transactions a crime. But he says he hasn’t yet decided on the punishment.
The rupee has been widely used in Afghanistan’s eastern and southern provinces bordering Pakistan. The Iranian currency is used in the western border provinces.
“I’m not against business, but I don’t want any other currency to be used in our country, especially the Pakistan and Iranian currencies,” Raziq told The Associated Press on Sunday.
Raziq’s ban came into effect last week. Traders said it had an immediate effect, with the afghani strengthening in recent days.
“This is very good news, as people have been confused about what currency they should use and keep,” said Kandahar tribal elder and businessman, Ahmad Shah Khan.
He said the afghani had strengthened to 560 for 1,000 Pakistani rupees, from 630 per 1,000 before the ban. The official Central Bank exchange rate on Sunday was 622 per 1,000.
The afghani has also strengthened against the dollar, from 68 to 65 since the ban was introduced, traders said. The official rate is currently 67.5 afghanis to the dollar.
Azrakhsh Hafizi, the head of the international relations committee of the Afghan Chamber of Commerce welcomed Raziq’s decision and urged officials nationwide to adopt the ban of foreign currencies.
The use of the U.S. dollar in transactions elsewhere in the country, including the capital Kabul, should also be banned, Hafizi said.
“The central bank almost every week buys afghanis in the market in order to maintain the stability of the Afghan currency but if we used only the Afghan currency all over the country there would be no need,” he said.
Raziq’s move coincides with a cooling of relations between Afghanistan and Pakistan following the breakdown of a peace process initiated last year by Afghan President Ashraf Ghani and the apparent failure by Pakistani authorities to move against Taliban leaders believed by Kabul to enjoy refuge over the border.
Taliban leaders moved into Pakistan when the U.S. invaded in 2001, ending their brutal five-year rule of Afghanistan. They are widely believed to live under Pakistan’s protection and to direct their war against Kabul, now in its 15th year, from cities including Quetta and Peshawar.
Raziq said the currency ban is in retaliation against Pakistan’s protection of the Taliban, a charge Pakistan denies.
“Pakistan is not only using bombs against us, they use every other tactic they can to destroy us — and that includes our businessman,” he said. Pakistani authorities have held up Afghan goods, including fresh produce, at border points until the fruit and vegetables rotted, Raziq said.
There are signs that Afghanistan is starting to look elsewhere for imported products as a way of pressuring Pakistani authorities into complying with Afghan demands that they force the Taliban into talks to end the war.
Wheat imports — which totaled 2.4 million tons last year, according to the U.S. Department of Agriculture — have traditionally come from Pakistan. But an increase in the customs duty charged by Afghan authorities has cut imports from Pakistan, with the business now going to Central Asian states.
Hafizi said the value of imports from Pakistan had fallen by $700 million since the start of the current financial year in January.
Afghanistan is in the depths of an economic crisis, with gross domestic product growth close to zero and the government’s plans for boosting growth and creating jobs stalled by its inability to improve the security situation.