Seyed Hamed Amini/ When the dollar decreases against the Afghan currency, we expect that the prices of goods, especially food and fuel, will decrease. However, the US dollar plays a decisive role as the reference currency for international trade in most countries, including Afghanistan. However, in reality, such declines in the value of the dollar do not always lead to lower commodity prices. Although the people of Afghanistan closely follow the decline of the dollar, they often witness the stability or even the increase of prices in the market. In this article, we try to reveal the complexities of this phenomenon by examining more closely the reasons.
Publish dateWednesday 23 October 2024 - 23:59
Story Code : 299175
Dependence on imports: costs beyond exchange rates
Afghanistan is one of the countries that heavily relies on the import of basic goods. Food, fuel, and even daily consumer goods are often imported from abroad. A devaluation of the dollar may at first glance mean lower import costs, but there are many costs involved that keep commodity prices high. These factors include transportation costs, customs duties, and taxes. These costs are independent of the exchange rate and are often related to factors such as fuel price increases and logistical problems.
Black market and monopoly: the bitter realities of the Afghan market
In some markets, monopolies and corruption can prevent prices from falling. Dealers and large companies that have a lot of control over the import and distribution of goods may prevent prices from falling in order to maintain their profit margins. These big players sometimes keep prices high, even if economic conditions change. In other words, instead of benefiting from the decline in the dollar rate, consumers become victims of black market profiteering.
Logistics costs: risky and expensive routes
Another important factor that prevents the reduction of prices is logistics problems. Afghanistan is facing serious challenges in transportation due to its geographical location and lack of proper infrastructure. The costs of moving goods from foreign ports to the country can be very high, especially when there are fluctuations in fuel prices. Dangerous roads, lack of adequate security, and border restrictions also add to these costs.
Inflation and economic instability: a cycle that traps people
In addition to the above problems, inflation and economic fluctuations also play an important role in determining prices. Even if the dollar depreciates, but the domestic inflation rate is high, prices will remain stable or even increase instead of decreasing. This issue is especially visible in the situation where there are inflationary expectations in the society. Instead of reducing prices, producers and sellers are worried about the exchange rate rising again and refrain from reducing prices.
Conclusion: Dollar decrease, but life is more expensive!
Finally, there are several reasons why the depreciation of the dollar against the Afghani currency does not have a tangible effect on prices. The Afghan market is faced with factors such as monopoly, logistics problems, and inflation, which simply do not allow changes in the exchange rate to lead to a decrease in the price of basic goods. In the meantime, people continue to struggle with economic problems and hope that sustainable solutions will be found to reduce the cost of living.
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