You’d think a country largely cut off from the global banking system would have a currency worth less than the paper it’s printed on. Honestly, that’s the logical assumption. Most people look at the headlines coming out of Kabul and expect the dollar vs afghani currency relationship to be a one-sided blowout. But if you check the charts right now in early 2026, the story is weirdly different. The Afghani (AFN) has been holding its ground with a stubbornness that defies standard economic theory.
As of mid-January 2026, the exchange rate is hovering around 65.5 AFN per USD. Just a few days ago, it was closer to 63. That’s a far cry from the dark days of early 2022 when it plummeted past 104.
Why is this happening? It’s not because the economy is booming. Not even close. It’s a mix of aggressive central bank intervention, a ban on using foreign cash for local deals, and a steady, if controversial, drip of humanitarian aid.
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The Iron Grip of Da Afghanistan Bank
The folks at Da Afghanistan Bank (DAB) aren't playing around. They have one primary mission: keep the Afghani stable at any cost. Since the change in government in 2021, they’ve basically banned the use of US dollars, Pakistani Rupees, and Iranian Rials for domestic transactions. If you want to buy bread or pay rent in Kabul, you use the Afghani. This forced demand is a massive pillar for the currency's value.
But it’s more than just a ban. The central bank regularly auctions off millions of US dollars to keep the market liquid.
"We continue our efforts aimed at maintaining the value of Afghani and domestic price stability by implementing appropriate monetary policies,"
— Governor of Da Afghanistan Bank, January 2026 statement.
It’s a "managed float" in the strictest sense. They let the market breathe a little, but the second the AFN starts to slide too fast, they step in with a bag of dollars.
Where do the dollars come from?
This is the part that gets complicated. A huge chunk of the stability in the dollar vs afghani currency pair over the last two years came from UN humanitarian aid. For a long time, the UN was flying in literal "bricks of cash"—physical US dollars—to fund aid operations because the electronic banking systems were frozen by sanctions.
In 2022 alone, that relief peaked at $3.8 billion. That’s a lot of greenbacks entering a small, isolated economy. However, the tap is starting to run dry.
- 2025 cuts: US aid programs were sharply reduced, particularly under the new administration in early 2025.
- 2026 projections: The UN is asking for $1.71 billion for 2026, which sounds like a lot, but it’s a 29% drop from the previous year.
- The "Aid Axe": Organizations like the International Crisis Group have warned that as donors pull back, the burden of keeping the currency stable falls entirely on the local authorities.
The Real Price of a "Strong" Currency
You might think a strong Afghani is good news. In some ways, it is—it keeps the price of imported flour and fuel from skyrocketing. But there’s a darker side to this. Because the currency is being propped up while the actual economy (jobs, manufacturing, exports) is stagnant, Afghanistan has actually dealt with deflation.
Prices for some goods have been dropping not because there’s plenty of food, but because nobody has any money to buy it. It’s a "liquidity trap." The World Bank noted that while the Afghani appreciated by nearly 5% compared to pre-2021 levels, the actual GDP growth is sluggish, projected at only 2.2% for 2025.
Basically, the currency looks healthy on a screen, but the people are struggling.
- Refugee Influx: Over 2.7 million people have returned from Pakistan and Iran recently. They need jobs and food, putting insane pressure on the local market.
- Trade Deficits: Exports are down 3%. Afghanistan is buying way more from the world than it's selling.
- Sanctions: International banks still won't touch Afghan accounts. This makes every "dollar vs afghani currency" trade a manual, difficult process.
Why 2026 is a Turning Point
We are entering a phase where the "artificial" supports for the Afghani are being tested. The US State Department recently pledged $2 billion in global aid, but Afghanistan was notably left off the list. This sends a clear signal: the cash flights are ending.
Without that steady supply of physical dollars, the Da Afghanistan Bank will have to rely on its own reserves. But remember, billions of those reserves are still frozen in New York and Europe. It’s a high-stakes poker game where the central bank is trying to maintain confidence with a dwindling stack of chips.
Breaking Down the Exchange Rate Trends
If you look at the snapshots from the last year, the volatility is actually quite low for a "crisis" economy.
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- January 2025: 1 USD = ~70 AFN
- July 2025: 1 USD = ~71.8 AFN
- January 2026: 1 USD = ~65.5 AFN
That 7% appreciation over the last year is wild when you consider the humanitarian crisis. It’s driven by the fact that the Taliban government has been surprisingly effective at collecting taxes and customs duties in Afghanis, which they then use to buy more dollars or fund operations. They’ve also cracked down on the "Hawala" dealers (informal money movers) to ensure they aren't speculating against the local currency.
What This Means for Businesses and Aid
If you're looking at the dollar vs afghani currency market for business or remittances, you have to be careful. The "official" rate and the rate you get on the street in the Sarai Shahzada money market can differ, though the gap has closed significantly thanks to strict enforcement.
Actionable Insights for 2026:
- Watch the UN Appeals: If the 2026 Humanitarian Response Plan remains underfunded (currently targeting 17.6 million people), the supply of dollars will tighten, and the AFN will likely weaken toward the 75-80 range.
- Monitor the Borders: Pakistan recently lifted a months-long transit halt. If trade with Pakistan and China picks up, it could provide a natural source of foreign currency that doesn't rely on aid.
- Diversify Holdings: For those operating in the region, keeping everything in AFN is risky. The currency's strength is policy-driven, not market-driven. Policies can change overnight.
- Pay Attention to the Fed: US interest rate cuts expected in mid-2026 might slightly weaken the dollar globally, which could give the Afghani a bit more breathing room without the central bank having to lift a finger.
The stability we see now is a fragile peace. It’s a result of one of the world's most aggressive experiments in currency control. Whether it can survive the "Aid Axe" of 2026 is the million-dollar question—literally.