Afghanistan’s currency is known as the afghani, which is denoted by the sign “Afs” while its code is AFN, as issued by the Da Afghanistan Bank, which is the central bank. The currency exists in several currency values including 1Af, 2, 5, 10, 20, 50, 100, 500, as well as 1000Afs. There are only three coins in circulation worth 1Af, 2, and 5Afs. In addition to the afghani, the citizens of Afghanistan, to a lesser degree, also make use of the US dollar. Currently, one Afghan afghani is equal to about $0.014, which translates to one US dollar being equal to 73.22Afs.
History of the Currency of Afghanistan
Prior to the introduction of the Afghani in 1925, the nation was using the Afghan rupee and other Indian currencies that were adopted in 1891. At that time, the afghani was divided into 100 pul and one amani was equal to 20 afghani. The rupee coins were used up until their complete removal in 1978. Before this removal, the maiden afghani banknotes were introduced in 1935.
With the exception of the period during World War I, market forces always controlled the rate of foreign exchange in Afghanistan. However, the banks sometimes came up with a fixed exchange rate so as to deal with the constant changes in the rate of exchange. For example, the Bank-e Milli came up with such a plan in 1935 where one Indian rupee was fixed at 4Afs.
After the establishment of the Da Afghanistan Bank, the rates were regulated closely but the efforts were thwarted by the civil war in the 1980s. For example, dysfunctional governments and warlords began to create their own currencies without any form of regulation or standardization. About 100 trillion Afghani was declared worthless in 1996. Matters worsened when the United States invaded Afghanistan in 2002. By September 2002, one US dollar was equal to a whopping 52,000Afs.
Currency of Afghanistan Post 2002
In 2002, the currency was denominated and its ISO 4217 code was switched to AFN. The new denomination replaced the older one issued by the administration of former President Rabbani, which was now equivalent to 0.001 of the new afghani. In the case of the currency issued by the warlord Dostum, they were equal to 0.002 of the new afghani. All this was an attempt to stop the out-of-control inflation.
Publicly, the move was received well. In particular, people were happy that they no longer had to carry bags of money in order to make small purchases. In addition, the currency was finally back under the control of the central bank instead of the warlords. The majority of the older currencies were destroyed by the end of the same year. At that time, one dollar was equal to 43 of the new afghani. Since then, the new currency has been slowly gaining ground since more people are willing to accept it as the currency of choice.
Despite all these milestones by the currency, most big businesses have not yet started using the new currency as it is still relatively weak. In addition, the cities closer to the borders with Iran and Pakistan mostly use Iranian and Pakistani currencies.