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18 Aug, 2021 14:23

Washington blocks US dollar supplies to Afghanistan as Taliban takes power

Washington blocks US dollar supplies to Afghanistan as Taliban takes power

The US has reportedly suspended cash shipments headed to Afghanistan, used to bolster the country’s shaky economy, to keep it out of the hands of the Taliban, who took control over the state on Sunday.

The bulk shipment of US dollars that was to be transferred to Afghanistan last Friday was halted, while access to government accounts managed by the Federal Reserve and American banks was blocked, according to people familiar with the issue, as quoted by the WSJ.

“Any central bank assets the Afghan government has in the United States will not be made available to the Taliban,” a Biden administration official said.

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The emergency decision was reportedly made before the Afghan government, headed by former President Ashraf Ghani, fell and senior leadership fled to neighboring countries. However, the US Treasury Department was forced to block the funds as several provincial areas across the country were seized by the Taliban (which is listed as a prohibited terrorist organization in Russia) before making their way towards the capital, Kabul.

The US move reportedly evoked panic among the Afghan central bank management, prompting its governor, Ajmal Ahmady, to flee the country. Ahmady’s departure sent the national currency, the afghani, plummeting. Later, the former chief tweeted that the measure taken by the White House limited the regulator’s ability to support the national currency.

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According to the former governor, the central bank has $9 billion in reserves, nearly all of which is stored outside the country. As the access to those reserves has been blocked, “the amount accessible to the Taliban is almost 0.1%,” he stated on Tuesday, as quoted by the media.

On Wednesday, the afghani rose 4.2% to 82.6 per US dollar, for the first time in five days since the turmoil started.

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