“The economic situation and national interests in the country require that all Afghans use Afghan currency in their every trade,” the Taliban said in a statement, Reuters reported. Since the terrorist group seized control of the country nearly three months ago, the national currency, the Afghani, has depreciated heavily. This comes at a time when the withdrawal of international financial support has severely strained the economy.

What has the Taliban said about the use of foreign currency?

On Tuesday, the Taliban made a surprise announcement, banning the use of all foreign currency across the country. The terrorist organisation urged everyone — from shopkeepers to business owners — to conduct all transactions using the national currency, the Afghani.

“The Islamic Emirate instructs all citizens, shopkeepers, traders, businessmen and the general public to … conduct all transactions in Afghanis and strictly refrain from using foreign currency,” the Taliban said in a statement, posted online by spokesperson Zabihullah Mujahid.

But why has the Taliban imposed this ban?

The Taliban’s latest move comes at a time when the country is facing a drying up of foreign aid. The terrorist group has been pushing for the release of billions of dollars of overseas reserves, which have been frozen by the United States and other countries ever since it violently seized power in Afghanistan over two months ago. In fact, earlier, overseas grants financed about three quarters of the country’s public spending, according to the BBC.

Since then, the value of the Afghani has drastically depreciated. Mujahid said that the use of foreign currencies “has negative effects on the country’s economy”, and thus, trade must be conducted using afghani currency in national interest. According to the Taliban, anyone who is found violating this order will face legal action.

What does this mean for Afghanistan’s economy?

It is still unclear how the Taliban will enforce this new rule, particularly as the country has relied heavily on US dollars for conducting trade for over two decades now. According to a Bloomberg report, two-thirds of Afghan banks’ deposits and half of the country’s national loans are in US dollars. In some parts of the country, especially near the international border, Pakistani rupees are also used for trade.

Business owners and traders have preferred using dollars to pay for imported goods and services as well as larger transactions, such as purchasing a home. The ban is also likely to further complicate the process of receiving humanitarian aid from overseas.

Some fear that there just isn’t enough Afghan currency to go around. Those working in the Finance Ministry and central bank told AP that the previous government failed to print enough local currency before Kabul’s fall in August.

The country is currently dealing with a severe drought, which has destroyed most of its wheat crop and caused a spike in prices. Afghanistan’s healthcare system is also struggling to stay afloat amid cutbacks in international aid.

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About 22.8 million people, which accounts for more than half of the country’s population, is “marching to starvation” due to acute food insecurity, the World Food Programme said. The situation is likely to get worse with winter inching closer. The United Nations predicts 95 per cent of Afghan population will go hungry and about 97 per cent is likely to sink below the poverty line, AP reported.

In October, the IMF had warned that the country’s economy runs the risk of shrinking by 30 per cent this year, which could potentially cause widespread poverty and a large-scale humanitarian crisis.