The Afghanistan Afghani (AFN) is the national currency of one of the most geopolitically complex and economically fragile nations in the world. Issued by Da Afghanistan Bank, the Afghani plays a vital role in domestic transactions but has limited influence in the global financial system.

Since its introduction in 1925, and especially after its redenomination in 2002, the AFN has endured sharp volatility, largely driven by political instability, international sanctions, and dependency on foreign aid. For forex traders and economic analysts, understanding the Afghani means navigating a currency that is both exotic and highly sensitive to internal and external shocks.

This article explores the origin, structure, and current economic context surrounding the Afghanistan Afghani.

What is the Afghanistan Afghani (AFN)?

The Afghani (symbol: ؋ / ISO code: AFN) is the official currency of Afghanistan. It is issued and regulated by the country’s central bank, Da Afghanistan Bank. The currency is used throughout the nation and, despite its low liquidity in global markets, is listed on some Forex platforms as part of exotic currency pairs.

History of the Afghani

• Original introduction: The Afghani was first introduced in 1925, replacing the Afghan rupee.
• Redenomination: In 2002, after the collapse of the Taliban regime and with international support, the Afghani was reformed and redenominated to restore monetary stability.
• Initial exchange rate (2002): 1 new Afghani = 1,000 old Afghanis

Since then, the AFN has experienced sharp currency fluctuations, reflecting ongoing political instability, humanitarian crises, and international sanctions.

Afghanistan’s Central Bank

Da Afghanistan Bank (DAB) is the central authority responsible for:

• Issuing the Afghani
• Managing foreign exchange reserves
• Implementing monetary policy
• Regulating the national financial system

After the Taliban regained control in 2021, the DAB has operated under the new administration, with limited access to international reserves, significantly affecting the stability of the AFN.

Denominations and Subdivisions

The Afghani is divided into 100 pul, although this subdivision is now virtually obsolete due to inflation.

Banknotes in circulation:

• 1, 2, 5, 10, 20, 50, 100, 500, and 1,000 AFN

Coins:

• 1, 2, and 5 AFN (rarely used)

The banknotes are frequently updated to combat counterfeiting and feature cultural and historical themes from Afghanistan.

Economy and Exchange Rate Impact

Afghanistan’s economy is fragile and heavily reliant on foreign aid. Since the regime change in 2021 and the withdrawal of international forces, the country has faced:

• A sharp decline in economic activity
• Frozen foreign currency reserves
• Significant currency devaluation
• Low confidence in the banking system

In the Forex market:

• The AFN is considered a high-risk exotic currency
• Liquidity is extremely limited
• Exchange rates can vary drastically, especially in parallel markets

Summary