Afghanistan central bank to auction $10 million to support currency

• With the abrupt withdrawal of foreign support following oust of US backed govt from Afghanistan, economy has gone into freefall.
• The central bank invites eligible banks and foreign exchange dealers to bid in the sale.
• Assures "our esteemed compatriots that the functioning of the country's banking system will soon return to normal".

KABUL: Afghanistan's central bank said it would put $10 million on sale for banks and foreign exchange dealers at an auction on Tuesday as it seeks to support the Afghani currency from a sharp fall in recent days.

With the abrupt withdrawal of foreign support following the Taliban victory in August, Afghanistan's economy has gone into freefall, putting a severe strain on the banking system which has set weekly withdrawal limits to stop a bank run.

Some $9 billion in central bank reserves held outside the country have also been frozen by the United States, despite growing calls for them to be released to help ease the financial squeeze that is strangling the economy.

According to a money exchanger in the main Sarai Shazada exchange, the afghani was quoted at 93.80 to the dollar. That compared with a price of 91.20 four days ago.

The central bank invited eligible banks and foreign exchange dealers to bid in the sale. It said all successful bids had to be cleared in full by the end of the day.

"We assure our esteemed compatriots that the functioning of the country's banking system will soon return to normal and that the stability of the afghani will be maintained," the central bank said in an announcement.