Money is weird. Usually, when a country faces massive economic sanctions, an isolated central bank, and a total cutoff from the global banking system, its currency evaporates. It turns into confetti. Think of the Zimbabwean dollar or the Lebanese pound. But if you look at the exchange rate for 1 USD to AFN lately, you’ll see something that feels like a glitch in the Matrix. The Afghani hasn't just held its ground; for significant stretches over the last year, it was actually one of the best-performing currencies in the world.
How? Honestly, it’s a mix of aggressive local crackdowns, billions in "humanitarian" cash shipments, and a ban on using foreign money that would make a Wall Street regulator’s head spin.
The Reality Behind 1 USD to AFN
If you’re checking the rate today, you’re probably seeing something in the neighborhood of 65 to 75 AFN per dollar. Contrast that with the immediate aftermath of August 2021, when the rate spiked toward 100 or 120. People were panicking. Families were trying to dump their local cash for anything stable. But the Da Afghanistan Bank (DAB)—now under Taliban control—implemented a series of "draconian" measures that actually worked to stabilize the value, at least on paper and in the local markets of Kabul and Herat.
Most people get this wrong. They think a strong currency means a strong economy. In Afghanistan, it’s the opposite. The currency is "strong" because the supply is tightly throttled and the demand for dollars is being suppressed by literal force.
Why the Afghani stayed strong while the economy struggled
The Taliban banned the use of Pakistani Rupees and US Dollars for local transactions. If you’re caught buying groceries with greenbacks in some provinces, you’re in trouble. By forcing 40 million people to use a single currency for every loaf of bread and every liter of fuel, they created artificial demand.
Then there’s the cash. The United Nations has been flying in literal pallets of $40 million in US banknotes every few weeks for humanitarian aid. While this money is meant for "humanitarian purposes" and isn't supposed to go directly to the central bank, it eventually filters into the local economy. It provides the hard currency the country needs to pay for imports like electricity from Uzbekistan or wheat. Without those physical dollar shipments, the 1 USD to AFN rate would likely collapse overnight.
What’s actually driving the volatility?
It isn't just about trade. It's about psychology. In the Sarai Shahzada, Kabul's massive open-air money market, the vibe dictates the rate.
The Sarai Shahzada factor
This isn't a digital exchange. It’s hundreds of guys with cell phones and bags of cash. When rumors fly that the UN might stop flights, the Afghani dips. When the central bank announces a new auction of $15 million to "mop up" excess liquidity, the Afghani strengthens. It’s a raw, high-stakes version of the Forex markets we see in London or New York, but with much higher personal stakes for the players involved.
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Climate change is a hidden factor here too. Afghanistan is suffering from a brutal multi-year drought. When crops fail, the country has to import more food. To import food, you need dollars. When the demand for dollars goes up to pay for Pakistani flour or Iranian oil, the 1 USD to AFN rate feels the squeeze. It’s a constant tug-of-war between the central bank's restrictions and the basic human need to eat.
The "Salami Slicing" of Sanctions
The US Treasury and the Department of State have a weird relationship with the Afghani. They've frozen billions in assets held in the Federal Reserve Bank of New York, yet they allow the humanitarian cash to flow. This creates a ceiling for the Afghani. It can’t truly integrate into the world, so it lives in this strange, artificial bubble. You can't just use a SWIFT transfer to send money to Kabul. You use Hawala.
How Hawala bypasses the 1 USD to AFN official rate
If you want to send money to a relative in Kandahar, you don't go to a bank. You go to a Hawaladar in London, Dubai, or Minneapolis. You give them dollars, they call a guy in Afghanistan, and that guy hands over Afghanis.
The "Hawala Rate" is often different from the "Official Rate" you see on Google or Bloomberg. This is because the Hawala system accounts for the physical risk of moving money and the scarcity of certain bills. Sometimes, the 1 USD to AFN rate in the street is actually better than what the "official" stats say, because the market is desperate for physical dollars.
Surprising facts about the Afghan currency
- It’s mostly old paper: The central bank hasn't been able to print new bills easily because of sanctions. For a long time, the physical notes were literally falling apart—taped together, greasy, and crumbling. They recently managed to get some new notes printed abroad (in Poland and France via various deals), which helped stop a different kind of liquidity crisis.
- Total Ban on Crypto: The authorities didn't just stop at banning the dollar; they went after Bitcoin too. Several crypto exchange owners were arrested in Herat. They want total control over the money supply.
- No Interest Rates: Under the current administration, the banking system is moving toward a strictly Islamic model. This means the traditional tools used by central banks to manipulate a currency—like raising interest rates to fight inflation—aren't used in the same way. They rely almost entirely on "foreign exchange auctions."
Why the "Strength" is a Mirage
Let's be real. If you’re a farmer in Helmand, you don't care that the Afghani is "stable" against the dollar if you can't afford fertilizer. The purchasing power of the Afghani has plummeted even as its exchange rate stayed steady. This is "decoupling."
Prices for basic goods have risen because global supply chains are a mess and the cost of trucking goods into a landlocked country is insane. So, while 1 USD to AFN might look good on a chart, the actual amount of flour that 70 AFN buys is much less than it was three years ago. It’s a "hollow" currency.
Predicting the future of the Afghani
The stability is fragile. It depends on three things staying exactly as they are:
- The UN continuing to fly in pallets of cash.
- The Taliban maintaining a "fear-based" ban on foreign currency use.
- The neighboring countries (Pakistan and Iran) not having even worse economic meltdowns.
If any of those pillars break, the 1 USD to AFN rate will head back toward 100 quickly. Pakistan's economy, in particular, is a major risk. Because the two countries trade so much, the volatility of the Pakistani Rupee often "bleeds" across the border, regardless of what the authorities in Kabul want.
Understanding the "Spread"
When you’re looking at exchange rates, always look at the spread—the difference between the buy and sell price. In stable countries, this is tiny. In Afghanistan, the spread can be huge. This is the "uncertainty tax." If a money changer thinks the market is about to turn, he'll charge you a massive premium to take your Afghanis and give you dollars.
Practical Steps for Dealing with AFN
If you are managing remittances, traveling (though that's rare for most), or tracking this for business, here is how to handle it:
- Don't trust the first rate you see. Check a few sources. Look at the Da Afghanistan Bank's official daily auction results, but then check unofficial "Kabul exchange" Telegram channels. The gap between them tells you how much stress the market is under.
- Small bills matter. In the Afghan cash market, 100-dollar bills often get a better exchange rate than 1s, 5s, or 10s. It’s easier to transport and hide large denominations.
- Watch the Tuesday Auctions. The central bank usually holds its currency auctions mid-week. This is when the most "new" dollars enter the system. Usually, the Afghani is strongest right after these auctions. If you’re converting a large amount, timing it to the auction cycle can save a few percentage points.
- Diversify if possible. If you have assets in AFN, keep in mind that this is a "frozen" currency. It is very hard to move out of the country through formal channels.
- Verify the "New" vs. "Old" notes. Ensure that if you are receiving Afghanis, they are the newer series of notes if possible, as some older, highly damaged notes are being phased out or rejected by certain vendors.
The story of the Afghani is a lesson in how much a government can manipulate a currency through sheer willpower and a bit of luck. It defies traditional economic theory because the country is operating outside the traditional global economy. For now, 1 USD to AFN remains a symbol of a country in a strange sort of economic stasis—not growing, but not quite collapsing either.