Value lies only on paper

Afghani: Tracking the fluctuations of Afghanistan's volatile currency can be dizzying work.

August 11, 2002|By Todd Richissin | Todd Richissin,SUN FOREIGN STAFF

KABUL, Afghanistan - In the streets, on the sidewalks and across the dusty courtyards of Kabul's main market, the men stand daily, singing out over the thousand bleating car horns, swaying from side to side, looking as if they are playing accordions.

They are not. Between their outstretched hands, cradled in their arms, are the broken instruments not of musicians but of Afghanistan's economy - its currency. What is called a dollar in the United States is called an afghani, or an "af," here, oversized bills of pink and blue and brown that have devalued so much that they are scarcely worth the paper they are printed on.

One American dollar can be worth 35,000 afs before lunch and jump to 40,000 by dinner, depending on factors that are not always clear. That is about half the value that the afghani held when the new government took over - and a tiny fraction of its worth when the former Soviet Union invaded. Then, $1 bought as little as 400 afs.

The problem is not only an inconvenience for merchants and their customers, but also a real danger for the government, which has dedicated itself to providing tangible signs that the country is improving. The fluctuations have stabilized somewhat in recent months, but swings of 5,000 afs in a matter of hours can cost people here a lot of money, which has led to griping from all quarters.

Most of Afghanistan's currency is printed in denominations of 5,000 or 10,000. So, give one of these men 100 American dollars and he will hand over about 4 million afs. They are bundled in half-foot stacks that together can weigh about 3 pounds.

Afghanistan, one of the poorest countries on Earth, has a lot of millionaires. "But what can you buy with 1 million afs?" asks Amin Khusti, 45, who buys and sells currency at the Kabul market. "You can buy a broken back."

Fears of hyperinflation

In reality, 1 million afs will purchase a week's worth of dinners of lamb and rice and bottled water here, though only foreigners dine so lavishly in Kabul. It takes more than 2 million afs for a barely decent hotel room for a night, 3 million for a room with a shower on the same floor, 4 million for one with a refrigerator. A case of beer, still illegal in Afghanistan but obtainable, goes for almost 6 million afs.

So Khusti is not the only person in Kabul with a sore back, a situation that has not been lost on the government. It has been working on plans to strengthen the currency before hyperinflation sends the af the way of the mark in 1920s Germany, when people pushed the bills in wheelbarrows and employers paid workers twice a day so they could spend in the morning - before the money's value fell further by quitting time.

Shoring up the af will not be easy, in large part for psychological reasons.

It is difficult to have faith in a currency when the singing money-changers, exhausted from holding their bills aloft, stack them like minifortresses around them. "Dollar-kaldar-tuman-afghanis," they chant over and over, pitching the currency from America, Pakistan, Iran and Afghanistan, though every currency in the world can be bought and sold at the market.

A swirl of currencies

Adding to the government's difficulties in stabilizing the af is not just the ability to buy and sell different currencies but also the willingness of people here to trade money from any place in the world in exchange for goods or services. Pull up to a gas station in Afghanistan and the attendant approaches the car window with a calculator, knowing the driver is as likely as not to pay in Pakistani rupees - and chancing whether the af has dropped in value since business opened that morning.

"We will do something about the currency, but it's premature to say what we will do," says Ashraf Ghani, an adjunct professor at the Johns Hopkins University who is Afghanistan's finance minister. "It would not do any good to discuss what will happen. We are working on it, and the system now is very much a working system, even if it has troubles."

People such as Khusti are in business because the system can work, for them. Like traders on Wall Street, the money-changers are gamblers, betting they understand the market well enough that they can make money buying afs when their value drops and selling them when their value increases. The swings, Khusti says, directly correlate to the stability of the government but are also influenced by the strength of the dollar.

When Afghanistan's vice president was assassinated this summer, the value of the af dropped. After he was buried, it rose. And there were fluctuations in between - again, as on Wall Street - that depend on supply and demand and nuances that are not always clear.

"The business goes up and down, and people get mad," says Khusti, 45. "You can't say when it will go up and when it will go down except from experience and feeling. I've worked at this 25 years, I do planning, and so I've gotten rich from this business."

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