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KABUL: Afghanistan's growing economic crisis deepened on Wednesday as the afghani currency fell to the hitherto unseen level of 125 to the dollar, less than a week after breaching 100, adding to growing pressure on prices of food and other staples.

The abrupt withdrawal of foreign aid following the Taliban victory in August sent Afghanistan's fragile economy into deep shock and it could lose 20% of its nominal value within a year, according to a United Nations report.

The shock has been reflected in the rate of the afghani, which was changing hands at around 77 to the dollar before the Taliban takeover and has since deteriorated steadily as the crisis has deepened and the supply of dollars has dried up.

Donors back $280m transfer for Afghan food, health: WB

"Dollars have disappeared from the market," said Said Mohammad Taher Qayomi, a member of the leadership council of Sarai Shahzada, the main Kabul foreign currency exchange.

On Monday, as the price of the dollar surged from 112 in the morning to 125 in the afternoon, dealing was suspended for a time at the bustling exchange, where dealers buy and sell currencies in a crowded courtyard.

Some dealers said that food wholesalers had immediately adjusted their prices to the newest dollar rate, adding pressure on households already struggling to survive in the slowdown.

The sharp rise will also push up housing costs in some parts of Kabul, where rents are sometimes tied to the value of the dollar.

The currency slide has gone hand in hand with a crisis in the banking system, with depositors struggling for access to their money and the banks shut off from the international financial system by the threat of US sanctions.

US tells Taliban to 'earn' the release of frozen funds

On Friday, the US Treasury Department formalized guidance allowing personal remittances to Afghanistan and protecting senders and financial institutions from US sanctions.

But around $9 billion in central bank reserves held outside Afghanistan remain blocked despite repeated warnings that the financial system and the wider economy face collapse without an urgent injection of funds.

Qayomi said political differences with the new Taliban government should not be used to impose suffering on ordinary Afghans.

Afghan acting FM asks US to lift ban on central bank reserves

"This is not just an issue for the Taliban. These are all problems for common people. People need to pay their rent, they need to eat."

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