US Tightens Taliban's Funding... Approximately 11 Trillion Won Frozen

Most of Afghanistan Central Bank's $9 Billion Forex Reserves Held Abroad
US Likely to Request IMF to Suspend Afghanistan's SDR Allocation for COVID Response

President Joe Biden of the United States [Photo by EPA Yonhap News]

[Asia Economy Reporter Park Byung-hee] The United States has stepped up pressure on the Taliban by comprehensively blocking dollar funding channels that could flow to the Taliban.

According to Bloomberg on the 17th (local time), a U.S. government official announced that approximately $9.5 billion (about 11.1986 trillion KRW) linked to the Afghan central bank has been frozen to prevent the Taliban from securing dollar funds. Both the Federal Reserve (Fed), the central bank, and commercial banks have reportedly frozen accounts of the Afghan government.

Azmal Ahmadi, governor of the Afghan central bank, told the Wall Street Journal (WSJ) on the same day, "The Afghan central bank's foreign exchange reserves are about $9 billion, but most of it is overseas," adding, "Because the U.S. has frozen the accounts, the foreign exchange reserves accessible to the Taliban amount to only about 0.1%."

Additionally, the U.S. did not send dollar funds to Afghanistan last weekend as the Taliban approached Kabul, the Afghan capital. According to the Washington Post (WP), the U.S. has provided about $3 billion annually to the Afghan government under the pretext of supporting the Afghan military.

The U.S. is also expected to request the International Monetary Fund (IMF) not to allocate Afghanistan's share of new Special Drawing Rights (SDRs).

On the 2nd, the IMF approved the largest-ever issuance of SDRs worth $650 billion in response to COVID-19. The SDRs are scheduled to be distributed on the 23rd according to member countries' contribution ratios. The Afghan government is expected to receive about $500 million worth of SDRs. In this regard, 18 Republican lawmakers sent a letter to Treasury Secretary Janet Yellen urging her to take measures to prevent the IMF from allocating Afghanistan's share of SDRs.

The WP assessed that Afghanistan is one of the poorest countries in the world and heavily dependent on foreign aid, and that blocking dollar funds will inevitably lead to significant turmoil.

Bloomberg reported on the 17th that the Afghani currency plunged to an all-time low in the foreign exchange market. Bloomberg noted that the Afghani has been declining for four consecutive days and was traded at 86.0625 Afghanis per dollar, a sharp drop of 4.6% at one point that day. In response, the Afghan central bank explained that the Afghani had fallen to 100 Afghanis per dollar but recovered to 86 Afghanis.

This content was produced with the assistance of AI translation services.