Donald Trump’s announcement brings inflation, drop in currency value to Afghanistan

Afghanis witnessed a sharp drop in value while prices of essential items in the Afghan capital Kabul rose soon after the new US president Donald Trump announced the stoppage of financial aid to the Taliban Government after taking oath on 20 January.

Biden administration used to provide $ 40 million to the Taliban every week on humanitarian bases, however, Trump has stopped this aid and demanded Taliban to return US weapons, which the US army abandoned at the time of leaving Afghanistan in 2021.

Residents of the Afghan capital Kabul have complained of rising food prices as the local currency lost value against the US dollar in recent days.

The currency fell to around 80 Afghanis to the dollar on Monday after hovering around 70 in recent weeks.

Kabul residents have reported rising prices of basic goods and are concerned they will not readjust in one of the poorest countries in the world, where consumers are anxiously following policy announcements from US President Donald Trump’s new administration.

Observers link the change to Trump’s decision to freeze US foreign assistance. The United States remains Afghanistan’s largest aid donor.

Afghanistan’s currency stability in part depends on US dollars flowing into aid organizations that are then exchanged in the market for Afghani, analysts said.

The fear is that “this dollar is not going to come anymore. So the Afghani does not have takers”, said analyst Torek Farhadi, who was an adviser on the development of the Afghani in the years after the end of the first Taliban reign in 2001.

For Abdul Maroof Niaz Zada, a 40-year-old Kabul shopkeeper, the fluctuation “may mean nothing to the rest of the world, but it has a big impact in Afghanistan”.

“The price changes are not noticeable for the businessmen maybe but it’s very difficult for the poor,” he said, noting that the prices of daily goods such as flour, oil, and rice had gone up by 200-500 Afghanis ($2.60 – $6.70).

The World Food Programme said in January nearly 15 million people are going hungry across Afghanistan, with the UN agency providing aid to help people get through the country’s harsh winters.