Afghanistan remittance payouts limited to local currency -sources

MoneyGram International

11/09/2021 12:55

By Tom Arnold
    LONDON, Sept 11 (Reuters) - Afghanistan's central bank has
ordered banks to pay out remittances in local currency only, the
latest move to preserve scarce U.S. dollars, say sources
familiar with the matter.
    Hard currency remittances have formed an important source of
external finance for Afghanistan over the years but dollar
availability has dried up in the aftermath of the Taliban's
conquest of the country.
    Western Union Co's  WU.N  agent banking partners in
Afghanistan received a directive from the country's central bank
in the last few days to pay out remittances in afghani only,
said a source close to a money exchange provider.
    Remittances sent before the directive and selected by the
sender for dollar payout can continue to be paid in dollars, the
source said.
    MoneyGram International Inc  MGI.O  said it was paying out
in afghani only, without elaborating further.
Both resumed money-transfer services to Afghanistan last week https://www.reuters.com/world/asia-pacific/exclusive-western-union-resuming-services-afghanistan-senior-exec-2021-09-02,
 having suspended services in August after the Islamist militia
captured Kabul.
    No comment was immediately available from the central bank.
    Under the leadership of acting central bank governor, Haji
Mohammad Idris, a Taliban loyalist who has no formal financial
training, the central bank has been moving to restrict dollar
outflows amid a pause in foreign aid and a scramble by some
Afghanis to get savings out of the country.
    Further controls are expected to hasten the afghani's
depreciation against the dollar, exacerbating inflation in a
country where more than a third of the population lives on less
than $2 a day.
    "It's a matter of concern that the remaining physical cash
of U.S. dollars is going to reduce further," said an Afghani
banker. "With the restrictions we are predicting the dollar will
reach more than 100 afghanis to the dollar."
    The afghani was trading at around 80 to the dollar just
before the fall of Kabul on Aug. 15.
    Banks were told by the central bank last week to restrict
withdrawals by corporate customers to local currency only,
capped at around 20% of each customer's weekly operating costs,
said the banker.
    With around 80% of banking deposits in dollars, bankers say
controls should minimise the risk of insolvency.
    Since re-opening in the second half of August, banks have
been operating  with limited services, including $200 weekly
limits on withdrawals and few wire transfers.

 (Additional reporting by James Mackenzie; Editing by Christina
Fincher)
 ((Tom.Arnold@thomsonreuters.com; +442075428510; Reuters
Messaging: tom.arnold.thomsonreuters.com@reuters.net))