The Afghani, Afghanistan’s national currency, has demonstrated remarkable resilience as it emerged as the top-performing currency in the third quarter of 2023. Since July 1, the Afghani has surged by an impressive 9% against the US dollar.

In fact, this makes the Afghani the third-strongest performing currency of the year thus far, trailing only behind the Colombian peso and the Sri Lankan rupee.

In Afghanistan, the exchange of foreign currency is facilitated through money exchange shops, locally known as “sarrafs,” which are ubiquitous, found in markets, cities, and villages.

The largest and most influential sarraf market is situated in Kabul, known as Sarai Shahzada. It serves as Afghanistan’s financial hub, facilitating substantial daily transactions involving thousands of dollars. Notably, the central bank has not imposed any trading limits.

As a consequence of financial sanctions, a significant portion of funds sent to Afghanistan from other countries now flows through an older money transfer system called “Hawala,” which has become a crucial component of the sarrafs’ business operations.

According to the United Nations (UN), Afghanistan requires approximately $3.2 billion in aid for the current year, with $1.1 billion already disbursed. Last year, the UN allocated around $4 billion in aid, largely due to the dire circumstances faced by nearly half of Afghanistan’s 41 million population, who were grappling with the threat of starvation.

Since the Taliban regained control of Kabul in August 2021, the group has implemented stringent currency controls, prohibiting the use of the US dollar and Pakistani rupee by locals and curtailing online trading. These measures have indeed bolstered the Afghani’s value, but Afghanistan’s economy has grappled with a significant decline since the Taliban’s return.