Kabul eyes trade with Moscow, Beijing in local currencies

KABUL (Pajhwok): Acting Minister of Commerce and Industry Nooruddin Azizi has announced the caretaker government is in advanced negotiations with Russia and China to conduct trade transactions using national currencies.

In an interview with Reuters, Azizi said that proposals had been submitted in this regard to both Russia and the Chinese Embassy in Kabul.

Technical teams from Afghanistan and Russia are currently working on details of the agreement, according to the interim commerce minister.

The initiative aligns with Moscow’s efforts to reduce reliance on the US dollar and comes as Afghanistan faces a significant decline in US currency inflows due to international aid cuts.

“We are currently engaged in specialised discussions on this matter, taking into account regional and global economic conditions, sanctions and the challenges faced by both Afghanistan and Russia. Technical talks are ongoing,” Azizi said.

He noted that annual bilateral trade between Afghanistan and Russia currently stood at around $300 million and was expected to grow substantially as investment increased.

He indicated that Afghanistan planned to expand imports of petroleum products and plastics from Russia.

“I am confident that this is a very good option… We can use it to serve the interests and benefit of our people and our country,” Azizi commented.

He added, “We intend to pursue similar arrangements with China.” Trade between Afghanistan and China currently amounts to approximately $1 billion annually.

“A joint working group, composed of representatives from the Afghan Ministry of Commerce and the Chinese Embassy—an authorised body representing China in economic programmes—has been formed, and discussions are ongoing.”

Afghanistan’s financial sector has been largely isolated from the global banking system due to sanctions imposed on certain leaders of the Islamic Emirate of Afghanistan, who assumed power in 2021 following the withdrawal of foreign forces.

Abdul Nasir Rashtia, an economic expert, told Pajhwok Afghan News conducting foreign trade in the national currency could be advantageous for any country – particularly for import-dependent nations such as Afghanistan.

“When demand for foreign currency is high in the market, it can weaken the national currency, drive up prices and diminish the purchasing power of the people.

“If we are able to conduct foreign trade using the afghani, it could strengthen the currency, reduce demand for foreign exchange, stabilise trade and help Afghanistan gain financial independence,” he believed.

Overall, Rashtia concluded, trade conducted in national currency could offer considerable benefits for Afghanistan.

sa/mud