As American troops leave Afghanistan, U.S. dollars are also heading out the door.
The Afghani has dropped about 5 percent this quarter, the fifth-steepest fall among 84 so-called exotic currencies tracked by Bloomberg. It touched 60.8020 a dollar on May 20, the lowest in data going back to 2003, when currency reforms were completed after U.S. forces regained control from the Taliban.
The currency’s slide threatens to increase pressure on President Ashraf Ghani as he battles Taliban insurgents looking to retake power. Food and fuel prices are set to rise, worsening what the World Bank last month called a “fiscal crisis” in a nation where foreign donors finance two-thirds of its budget.
“This could be a turning point for the Afghan economy,” said Ahmad Masood, an economics professor at Kabul University. “If Ghani doesn’t bolster the currency, we could see widespread economic instability that would also help further the current security crisis.”
The Taliban are continuing to fight Afghan forces after a 13-year war that saw more than 2,300 American troops killed and cost almost $1 trillion. About 40 percent of Afghan towns and cities face a significant threat from Taliban insurgents, according to the United Nations.