SINGAPORE (TIP): Afghanistan‘s currency reserves are mostly held in foreign accounts and are probably inaccessible to Taliban rulers, leaving the country desperately low on dollars, Ajmal Ahmady, who led the central bank until the capture of Kabul, said. Da Afghanistan Bank (DAB) controlled about $9 billion, some $7 billion of which was held as a mixture of cash, gold, bonds and other investments at the U.S. Federal Reserve, Ahmady, the acting governor, who has now fled Afghanistan, said on Twitter.

Most of the rest is in other international accounts and at the Bank for International Settlements, a bank for central banks based in Switzerland, and not physically in DAB vaults, he said – leaving about 0.2% or less of the total accessible to the Taliban.

“Given Afghanistan’s large current account deficit, DAB was reliant on obtaining physical shipments of cash every few weeks,” he said.

“The amount of such cash remaining is close to zero due a stoppage of shipments as the security situation deteriorated.”

No international reserves were “ever compromised” and “no money was stolen from any reserve account,” Ahmady added. Afghan currency dives on Taliban takeover

A U.S. administration official has also told Reuters that no assets of the Afghan government held in the United States would be made available to the Taliban.

The Taliban, who now control Kabul, have said treasury, public facilities and government offices were the property of the nation. Ahmady said he had been told Taliban were asking bank staff about the location of assets, but added that they should have foreseen it would be impossible to access them.

He now expects the local currency, the Afghani, to fall as the central bank cannot supply enough dollars to local banks and for the Taliban to use capital controls to prevent outflows.

“Inflation will rise as currency pass-through is very high,” he said. “This will hurt the poor as food prices increase.”

‘Taliban will not get access to Afghan reserves held in US’

Earlier, AFP reported that Taliban will be denied access to any Afghan reserves held in US accounts, quoting a US administration official on Monday.

As US forces were evacuating Afghanistan’s capital after the Taliban’s swift takeover, the official said: “Any Central Bank assets the Afghan government have in the United States will not be made available to the Taliban.”

The central bank’s gross reserves totaled $9.4 billion at the end of April, according to the IMF.

But most of those funds are held outside of Afghanistan, according to a person familiar with the matter.

The Taliban’s seizure of power comes after NATO withdrew its 9,500-strong mission on the back of a decision from US President Joe Biden to pull out his troops.

Source: Reuters/AFP