OPINION:
The recent meeting between Iran’s ambassador and money exchangers in Kabul’s Shahzada Sarai currency exchange market deserves attention.
It raises an important question: Is Iran seeking to use Afghanistan’s informal financial system to facilitate the movement of U.S. dollars at a time when both Iran and the Taliban face restrictions on international banking?
Iran has long relied on hawala and other informal financial channels because sanctions have restricted its access to the global banking system.
These channels have supported Iranian trade and financial transactions, including oil-related activities. Iran established a branch of Aryan Bank in Kabul, reportedly facilitating financial transfers between Afghanistan and Iran. Large amounts of money reportedly moved through these channels before the bank was closed.
Iran’s financial system has also historically been linked to Afghanistan’s currency markets, particularly Herat and Kabul’s Shahzada Sarai. This makes the ambassador’s meeting with Shahzada’s money exchangers noteworthy.
If it was simply diplomatic or commercial, there may be little concern. But if the purpose was to facilitate U.S. dollar transfers from Afghanistan to Iran, the consequences could be serious.
Afghanistan has limited foreign-exchange reserves and a fragile currency market. Large dollar outflows could weaken the afghani, increase import costs and put additional pressure on ordinary Afghans.
I witnessed the importance of currency flows firsthand as governor of Nangarhar province. In 2019, we introduced a program to reduce the circulation of Pakistani rupees.
Approximately 46 billion Pakistani rupees left Nangarhar’s economic system during the first month. Because Afghan banks did not deal in Pakistani rupees, money exchangers transferred the funds to Pakistan through hawala.
At the same time, approximately $1 million was transferred per day from Peshawar to Jalalabad through money exchangers. The result: greater stability for the afghani and reduced influence of the Pakistani rupee.
This experience showed that money exchangers are not merely intermediaries. They can influence currency supply, liquidity and economic stability while creating risk involving money laundering, drugs and other illicit activities.
My concern is not legitimate trade between Afghanistan and Iran. It is the possibility that Afghanistan’s vulnerable financial system could be used to address another country’s sanctions-related financial problems.
Taliban authorities should make such meetings transparent and properly regulate financial institutions and money exchangers to prevent illicit or destabilizing capital outflows.
SHAHMAHMOOD MIAKHEL
Former governor, Nangarhar province, Afghanistan
Herndon, Virginia
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