CBA Concerned About Forex Outflow to Iran

EghtesadOnline: The Central Bank of Afghanistan raised concerns about the increasing smuggling of US dollars to neighboring countries, especially Iran, from Afghanistan and warned that this could further impact the value of Afghani against the dollar.

News ID: ۷۴۶۰۲۲

18 September 2018

In the past week, the value of Afghani has fluctuated against the dollar–from a low of 73 AFN to 78 AFN against the USD.

According to TOLOnews, this has raised concerns among Afghan citizens, businessmen and traders.

“(Dollars) are being transited from Mazar-i-Sharif via Hairatan Port to Uzbekistan, Dubai and [Persian] Gulf countries and there the money is deposited into bank accounts of some people, or the money is being given to those people in cash. People smuggle currency to anywhere where there is a high demand and some benefit for the smuggler,” Financial Tribune quoted Sediq as saying.

While experts and officials say the new US sanctions against Tehran is the main reason for dollars leaving Afghanistan, the findings of a survey by an organization show that for every dollar transferred to Herat, someone is making at least one Afghani profit.

Based on the findings, if a person transfers $10,000 from Herat to Iran’s Mashhad city, the transfer costs will be $1,100.

Najibullah Kabuli, chairman of Hezb-i-Musharikat Milli, on Sunday said at a press conference in Kabul that the government should put a stop to the smuggling of dollars to Iran.

A number of MPs also told TOLOnews that US sanctions on Iran have resulted in Tehran dropping regulations around bringing US dollars into the country.

“Following the sanctions on Iran, Tehran has changed its money policy and has made dollar importation free while in the past there were some rules,” MP Khalilullah Shahidzada said.

Sakhi Ahmad Peyman, the head of Industries Commission at Afghanistan Chamber of Commerce, told ILNA that Afghan merchants buy Iranian products in rial and pay through the exchange bureaux. He added that this practice is cost effective for Afghan businessmen while importing goods from Pakistan and China would be expensive.

According to Ahmad Peyman, the trend in the labor market is the opposite, with Afghan workers leaving Iran for elsewhere due to the rial’s depreciation against the dollar.

According to Bloomberg, traders generally travel from Afghanistan’s Herat Province to Iran’s second-biggest city, Mashhad. They use US dollars to buy rials from desperate Iranian sellers at black-market rates in excess of 120,000 rials to the dollar.

“These currency traders then sell the rials in Afghanistan for a profit of as much as 30%,” said Eimal Hashoor, a spokesman of Da Afghanistan Bank, the country’s central bank.

Traders can get the best prices for rials in Afghan provinces that border Iran, rather than in Kabul, said a second trader.

US sanctions came into effect on Aug. 7, preventing Tehran from purchasing greenbacks, trading in gold or precious metals, and selling or acquiring various industrial materials. Further curbs in November will target Iran’s oil exports, a major source of revenue for the economy.