New Kabul Bank
Afghanistan’s currency extended losses to a record low as the departure of the acting central bank governor added to political turmoil weighing investor sentiment. Image Credit: AP

Dubai: Afghanistan’s currency extended losses to a record low as the departure of the acting central bank governor added to political turmoil weighing investor sentiment.

The Afghani fell as much as 4.6 per cent on Tuesday to 86.0625 per dollar, a fourth day of decline, according to data compiled by Bloomberg. The central bank was told there would be no more dollar shipments on Friday, which curtailed its ability to supply currency and led to more panic, acting Governor Ajmal Ahmady wrote in a Twitter thread.

Ahmady boarded a military plane at Kabul airport, where thousands sought to leave as the Taliban’s rapid territorial advance led to the collapse of the government. There was no evacuation plan, and President Ashraf Ghani’s departure without creating a transitional government contributed to the chaos, Ahmady wrote.

“Currency spiked from a stable 81 to almost 100 then back to 86,” the central banker wrote. “I held meetings on Saturday to reassure banks and money exchangers to calm them down.”

On Sunday, the governor left the central bank and went to the airport where he saw other government leaders. More than 300 passengers were packed into his flight, though it had no fuel or pilot, he wrote.

Pakistan takes a hit

The turmoil in Afghanistan spilled over into markets in Pakistan. Sovereign dollar bonds due 2031 for Pakistan dropped 1.8 cents on Monday, the biggest decline since the government priced the notes in March. Pakistani dollar bonds were the biggest losers in Asia on Monday, according to a Bloomberg Barclays index. The notes rose 0.4 cents on the dollar on Tuesday to 100.9 cents.

Investors are concerned over any impact on law and order in Pakistan, and whether “global forces will try to isolate Pakistan” due to its alleged support of the Taliban, said Abdul Kadir Hussain, the head of fixed-income asset management at Dubai-based Arqaam Capital.