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Afghanistan's economy is on the brink

A developing economic crisis in Afghanistan is adding a fresh layer of turmoil in the country.

Why it matters: “[T]he value of the Afghan currency could collapse, inflation could accelerate and the mix of violence and chaos could be prolonged,” the AP writes.


What’s new: Wire-transfer services Western Union and MoneyGram stopped facilitating payments into Afghanistan, a flow of money that’s “a key source of support for many Afghan families,” the Wall Street Journal reports.

  • The backdrop: ATMs are running out of cash. Prices for a range of essentials like flour and oil are rising sharply.

The big picture: The country’s economy has relied on foreign aid that’s at risk of shriveling up with the Taliban takeover.

What to watch: The Taliban appointed Mohammad Idris — “an obscure official” — as acting head of Afghanistan’s central bank, charged with steering monetary policy, Bloomberg reports.

The afghani, the country’s currency, is in freefall. For a place that facilitates trade in U.S. dollars, any imports will get more expensive.

  • What they're saying: “If the Taliban don’t get cash infusions soon to defend the afghani, I think there’s a real risk of a currency devaluation that makes it hard to buy bread on the streets of Kabul for ordinary people," the Overseas Development Institute’s Graeme Smith tells the AP.

The bottom line: “Afghanistan, unfortunately, was already facing multiple crises. … What you have on top of that is going to be economic hardships,” Ajmal Ahmady, who served as Afghanistan's central bank chief until the government fell and he fled the country, told CNN.

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Blame cars for the highest inflation reading since 2008

Inflation is at its highest level since 2008, thanks in very large part to a single item whose price has been going through the roof: Cars.

Why it matters: What goes up must generally come down, and there are strong indications — like data last week from prominent used car marketplace Manheim — that the unprecedented rise in auto prices is peaking. In the second half of this year, cars might well be a force making inflation numbers look artificially low.

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