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Afghanistan: Taliban face financial squeeze from SOP NEWS
Afghan money changers count Afghani bank notes at the currency exchange Sarayee Shahzada market in Kabul
With military retaliation against the Taliban ruled out, the West is turning to financial reprisals.
The US has frozen Afghanistan's central bank assets and global development aid is halted.
The speed of the Taliban's capture of Afghanistan last weekend has left the West scrambling to curtail the Islamist militants' grip on the country. Military action has been all but ruled out and instead the United States and its NATO allies have turned to financial warfare.
More on the Taliban's return to power
US President Joe Biden and the Federal Reserve have frozen billions of dollars in Afghan currency reserves held in the US. Nearly $9 billion (€7.7 billion) in assets are kept in the US and other countries, including $1.2 billion in gold and more than $300 million in international currencies.
In anticipation of the fall of Kabul, Biden last week halted shipments of US dollars to Afghanistan — a move the country's former central bank chief Ajmal Ahmady said would lead to "dire" prospects for the people.
Since the fall of Kabul, residents have waited in long lines for hours to withdraw their money
US financial newspaper The Wall Street Journal reported that Washington is also blocking Taliban access to government accounts managed by the Federal Reserve and other US banks.
Cash 'close to zero'
Ahmady wrote on Twitter that the country was “reliant on obtaining physical shipments of cash every few weeks,” due to a large currency account deficit. "The amount of such cash remaining is close to zero," he warned.
Several countries, including Germany, have halted development aid. Afghanistan relies heavily on foreign assistance to keep its fragile economy running. Last year, the country received nearly $8 billion in aid.
02:21 mins.
BUSINESS | 18.08.2021
What next for Afghanistan's economy?
The International Monetary Fund (IMF) has suspended around $340 million foreign exchange reserve assets that the Taliban could turn into hard currency citing a "lack of clarity within the international community regarding recognition of a new government."
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