Institute for War and Peace Reporting | Giving Voice, Driving Change

Afghan Currency Traders Accused of Cheating

Residents of Nangarhar province complain they are being charged more for marked notes.
By Kamal Zaher

Wasiullah, 32, stood in front of a money exchange shop in the eastern Afghan city of Jalalabad, angrily brandishing a handful of 100 dollar bills as he argued with a currency trader.

“Brother, look at these notes and tell me what’s wrong with them,” he demanded.

Wasiullah, 32, a resident of Khugiani district in Nangarhar province, said he wanted to change five 100-dollar bills into Pakistani rupees, a currency often used in eastern Afghanistan.

But he complained that the money changer wanted to charge him an extra 1.5 dollars for each 100 dollar bill on the grounds that the notes were damaged.

“That’s a big loss,” he said. “I swear to God that it’s robbery.”

Another man, Shawali, from Khewa district, joined in the dispute, claiming that he too was being charged an extra 1.5 dollars per banknote.

“He asked me why my dollar bill was folded. Since I folded it, its value has dropped by one dollar, but you can see it’s a new note,” he said.

Many Nangarhar residents complain that currency traders are charging extra to accept large-denomination US dollar notes which they claim are damaged.

In turn, the traders say that private banks charge them an additional fee on marked or creased notes, forcing them to pass on the costs to the customer.

For their part, some private banks say the Afghan central bank which regulates all monetary circulation will not accept damaged notes.

Foreign currencies are widely used in Afghanistan, with Pakistani notes used for day-to-day transactions in eastern and southern regions, and Iranian rials in western provinces. The American dollar is widely accepted, particularly in Kabul and northern provinces.

Rizwanullah Alikhel, a currency dealer at the Jalalabad market acknowledged that extra charges were common practice.

“We exchange folded and worn 100 dollar bills and those with a line on them for [an extra] one to 1.5 dollars, because the private banks won’t accept them from us,” he explained. “The banks say the central bank won’t accept them. So we have to take them at a different rate. We exchange the same bills for a slight mark-up.”

Alamzeb, another money changer in the market, said that if banks took damaged notes without charging fees, they would not need to impose extra charges on their customers.

“If private and state banks in Jalalabad accepted these bills from us, we’d take them from people without charging more,” he said.

Hajji Ghiljai of the currency traders’ union in Jalalabad said his association had complained several times to the head of the central bank as well as to private institutions.

“We have talked to the treasurer of Da Afghanistan Bank and to officials from the private banks about this,” he said. “At meetings, they promise to solve the problem, but it hasn’t been resolved. The banks do not accept such dollar bills from us; therefore, it is not our fault.”

Some private bank staff also said the central bank was at fault.

“They won’t take these banknotes from us in the Da Afghanistan Bank. If they accepted them, we wouldn’t be having no problems,” he said, adding that central bank officials had specifically told private bankers not to take folded, worn or marked bills.

The central bank denies issuing any such instruction. Hajji Rohullah, its branch head for Nangarhar, said the only ban was on US banknotes “where the image is destroyed or which have so much staining that the picture cannot be seen”.

“International banks won’t take such dollar bills from us,” he explained. “We do accept them, however, if they are a bit torn, have a little dye on them or are folded. However, the currency traders have turned this into a way of earning a profit.”

One Nangarhar trader, who asked to remain anonymous, appeared to back this theory up, saying the extra fees were just a scam.

“It’s very profitable for us. We take dollar bills from people and charge them one or 1.5 dollars. We then take the same notes to Kabul or Pakistan and exchange them there without paying anything extra to anyone. In fact, there are no problems at all with these bills.”

Economista said that while the individual sums involved seemed small, their cumulative effect was harming the local economy.

“These actions by the money changers and private banks is illegal,” said Ghulam Rabani, a lecturer at the Administration and Accounting Institute in Nangarhar. “They damage people’s economic circumstances, and that harms the province and eventually the country as a whole.”

Zabihullah Zmarai, a member of Nangarhar’s provincial council, said he was unaware of the problem until informed about it by IWPR.

“I will take action right now. I’ll talk to officials about it to resolve the problem as soon as possible, because it is a big loss for people in Nangarhar. Why should money flow into the pockets of just a few? That isn’t acceptable for us,” he said. “I will talk to the governor of Nangarhar and to the director of Da Afghanistan Bank. Those involved in this deceit must be prosecuted.”

Kamal Zaher is an IWPR reporter in Nangarhar province.