The first Afghani was introduced in 1925, replacing the Afghan rupee. In addition to being subdivided into 100 pul, 20 Afghani were equal to theamani. The rate of conversion from the rupee is sometimes quoted as 1 Afghani = 1.1 rupee, based on the silver contents of the last rupee coins and the first Afghani coins. The Afghani initially contained 9 grams of silver.
Except during the Second World War, Afghanistan’s foreign exchange rate has been freely determined by market forces. However, for some periods, a dual exchange rate regime existed in Afghanistan: an official exchange rate which was fixed by the Afghan Central Bank, and a free market exchange rate which was determined by the supply and demand forces in Kabul’s money bazaar called Saraye Shahzada. For example, in order to avoid the seasonal fluctuations in the exchange rate, a fixed exchange rate was adopted in 1935 by the Bank-e Milli, which was then responsible for the country’s exchange rate system and official reserves. Bank-e Millie agreed to exchange the Afghanis at 4 Afs against 1 Indian Rupee in 1935. After the establishment of Da Afghanistan Bank as the Central Bank of Afghanistan, such a preferential official fixed exchange rate continued to be practiced. Although Da Afghanistan Bank tried to keep its official rate close to the Saraye Shahzada’s exchange rate, the gap between the official and free-market exchange rates widened in the 1980s and during the civil war.
Since 2002, Da Afghanistan Bank has adopted a floating exchange rate regime and has let the exchange rate to be determined freely by market forces.
The Afghani exchange rate vis-à-vis the U.S. dollar since 1950 has been shown in the following table:
| Afghani exchange rate (LCU in USD) | ||
|---|---|---|
| Date | Free-market exchange rate | Official exchange rate |
| 1950 | 39.0 | |
| 1960 | 40.8 | 17.7 |
| 1970 | 84.8 | 39.9 |
| 1980 | 39.2 | |
| 2003 | 49.0 | 49.0 |
| 2010 | 45.2 | 45.2 |
Prior to the U.S. invasion of Afghanistan, warlords, political parties, foreign powers and forgers each made their own Afghani banknotes, with no regard to standardization or honouring serial numbers. In December 1996, shortly after the Taliban took control of Afghanistan’s institutions, Ehsanullah Ehsan, the chairman of the Taliban’s Central Bank, declared most Afghani notes in circulation to be worthless (approximately 100trillion Afghani) and cancelled the contract with the Russian firm that had been printing the currency since 1992. Ehsan accused the firm of sending new shipments of Afghani notes to ousted president Burhanuddin Rabbani in northern Takhar province. The exchange rate at the time of Ehsan’s announcement was 21,000 Afghani to the U.S. dollar The Northern Alliance then had banknotes produced in Russia which were sold on the markets of Kabul at half their value.
In April, 2000, the Afghani traded at 6400 AFA per USD. By 2002, the Afghani was valued at 43,000 AFA per USD. By 2009, the Afghani was valued at 45 AFA per USD
Coins
In 1925, bronze and brass 2, 5 and 10 pul, billon 20 pul, silver ½ and 1 Afghani, and gold ½ and 1 amani coins were introduced, followed by silver 2½ Afghani and gold 2½ amani in 1926. In 1930, bronze and brass 1 and 25 pul were added, along with bronze 3 pul and cupro-nickel 10 and 20 pul in 1937.
In 1952, aluminium 25 pul and nickel-clad-steel 50 pul were introduced, followed by aluminium 2 and 5 Afghani in 1958 and nickel-clad-steel 1, 2 and 5 Afghani in 1963. In 1973, the Republic of Afghanistan issued brass-clad-steel 25 pul, copper-clad-steel 50 pul and cupro-nickel-clad-steel 5 Afghani coins. These were followed, between 1978 and 1980, by issues of the Democratic Republic of Afghanistan consisting of aluminium-bronze 25 and 50 pul and cupro-nickel 1, 2 and 5 Afghani.
Banknotes
Between 1925 and 1928, Treasury notes were introduced in denominations of 5, 10 and 50 Afghani. In 1936, 2, 20 and 100 Afghani notes were added. The Bank of Afghanistan took over paper money production in 1939, issuing notes for 2, 5, 10, 20, 50, 100, 500 and 1000 Afghani. The 2 and 5 Afghani notes were replaced by coins in 1958. In 1993, 5000 and 10,000 Afghani notes were introduced.
“A ‘pothole cave’ or ‘mouth of a shaft’ (or Pit cave) is said to be visible on the 10,000 Afghanis banknote as a limited dark area in the hillside above the ancient ‘pol’ or gateway at the ruins near Lashkar Gah. This is posibly the entrance to one of the man-made undergrounds at Qal’a-i-Bost.”