US froze nearly $9.5 billion of Afghanistan's reserves, reports say - leaving Taliban facing cash crunch

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Taliban fighters with a vehicle on a highway in Af
Taliban fighters with a vehicle on a highway in Afghanistan. Saibal Das | The India Today Group | Getty Images

  • The US has frozen nearly $9.5 billion of Afghanistan's reserves after the Taliban seized power, reports say.
  • It leaves the insurgent group facing a cash crunch and pressure on its currency.
  • The country's acting central-bank chief underscored the difficulty of governing on Wednesday.
  • For more stories visit Business Insider.

The US has frozen most of the roughly $9.5 billion dollars the Afghanistan central bank holds in reserve, according to reports.

Afghanistan's acting central-bank chief said on Wednesday that the move would cause problems for the Taliban, leaving them with little cash and the prospect of sharp inflation.

President Joe Biden's administration on Sunday froze Afghan central bank reserves kept in the US, the Washington Post reported on Tuesday. Bloomberg reported that the US had frozen nearly $9.5 billion in assets.

"Any central-bank assets the Afghan government have in the United States will not be made available to the Taliban," an administration official told the Post, on condition of anonymity. Insider has contacted the Treasury Department for comment.

Afghanistan's currency, the afghani, traded at a record low of around 86.1 per US dollar on Tuesday, according to Bloomberg data, after falling sharply from around 80 per dollar two weeks earlier.

The country's acting central-bank chief, Ajmal Ahmady, who fled the capital Kabul as it fell to the Taliban, tweeted on Wednesday that the population could soon face strong inflation as a result of a weaker currency driving up the cost of imports. "This will hurt the poor as food prices increase," he said.

Ahmady also said the Taliban would likely have to implement capital controls - that is, limit the amount of money leaving the country - to try to keep a grip on the economy. "Taliban won militarily - but now have to govern. It is not easy," he said.

Estimates of the amount of assets frozen vary. A filing by Da Afghanistan Bank showed that it held around $10 billion of reserves on June 21, according to conversion rates on that date.

Ahmady said on Wednesday that the central bank had reserves of around $9 billion last week, with roughly $7 billion in the US Federal Reserve system in the form of US government bonds, gold, and other assets.

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