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Iran’s devalued Rial Making its way to Afghanistan for exchange to dollars

in Afghan Business

Iran’s devalued Rial Making its way to Afghanistan for exchange to dollars

Desperate to find alternate ways to bring in hard currency into Iran, a number of Iranians are packing trucks with devalued Iranian currency, Rial, and entering Afghanistan to trade for dollars.

The currency traders are made up of wealthy and middle-class Iranians who are making efforts to protect their savings and business profits by moving them offshore. Unable to transfer money out of Iran in a legitimate manner, Iranians instead convert their Rial in Afghanistan and then transfer the money to banks in the Persian Gulf and beyond.

Iran’s currency is losing its value amid the sanctions imposed by the West that have slashed Iran’s vital oil revenue and cut the country off from international financial markets. The sanctions are an effort from the US and its European allies to coerce Iran into abandoning its nuclear programs.

American government’s approach towards Iran is getting harsher, as President Obama last month quietly strengthened the sanctions by giving the Treasury Department the capacity to punish any person who makes any sort of financial transaction on behalf of the government.

Afghan money traders have been told by American officials to not conduct business with Arian Bank, an Afghan bank owned by a pair of Iranian banks, who is alleged for being used by the Iranian government to move cash in and out Afghanistan.

Haji Najeebullah Akhtary, the president of Afghanistan’s Money Exchange union, an association of traditional money transfer and exchange businesses that are known as hawalas, said he and his members have witnessed a steady increase in Iranians bringing cash into Afghanistan over the past year in trucks, with transfers arranged by Afghan middlemen who take 5-7% commission. That comes on top of routine transfers of Rial by Afghans who have sought refuge in Iran.

The money is easily transferred to relatives and business associates in distance locales within minutes through the hawalas , where the transfer goes largely unmonitored and unimpeded.

According to Mr. Akhtary, Rial makes its way to Afghanistan primarily either directly across the border with Iran or through Paksitan.

To many Afghan traders, sanctions on Iran are merely an American issue that they are not bothered about.

Cash smuggling is a major concern among Afghan officials.

In 2011, an estimated $4.6 billion, a sum equivalent to roughly a third of Afghanistan’s gross domestic product, was stuffed into suitcases, shrink-wrapped onto pallets or packed into boxes and flown out of Kabul’s airport on commercial airline flights, most of them headed for Dubai, United Arab Emirates, according to the central bank.

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