Afghanistan redenominates currency

One new afghani will buy what 1,000 afghanis buy now

Afghanistan has announced, as expected, that it will redenominate its currency, the afghani.

People will be proud

Afghan President Hamid Karzai

One thousand old afghanis will be worth one new afghani.

Western diplomats welcomed the move as a symbol of relative stability in Afghanistan after 23 years of fighting.

But there was also widespread concern that the decision has been made too early and it could cause panic selling of old afghanis.

The redenomination process could be made tricky by the fact that the communications system in Afghanistan is still very basic, some sceptics said.

Talk it up

Afghan President Hamid Karzai disagreed.

Two plane loads of the new afghani notes have already arrived in Kabul and the exchange with the old notes will begin soon

Afghan government

"People will be proud," he said.

"They will be able to use the new Afghanis in all corners of Afghanistan.

"The new money will have value, and in the exchange markets it will be stable and credible."

Under pressure

"Two plane loads of the new afghani notes have already arrived in Kabul and the exchange with the old notes will begin soon," a government statement said.

People will have plenty of time to exchange their money

Central Bank Governor Anwarulhaq Ahadi

On Tuesday, when traders first got wind of the changes, the value of the afghani fell sharply in the currency markets to its lowest level against the US dollar in 10 months.

One US dollar could be bought for 40,000 afghani on Monday. On Tuesday, a dollar was worth 52,000, currency dealers in Kabul said.

The fall was the sharpest one-day drop since Mr Karzai came to power in December 2001.

Plenty of time

Central Bank Governor Anwarulhaq Ahadi was surprised about the currency's sharp fall.

"There is no danger for anybody with the introduction of new denominations," he said.

"People will have plenty of time to exchange their money."

The new afghani notes have been printed in Germany.