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Exchange Rate
( 2012 February 05) |
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Currency
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Cash |
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Selling |
Buying |
| USD | 49.3400 | 49.1400 | | EURO | 64.8900 | 64.2900 | | Pound | 77.9500 | 77.1500 |
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For more
rates click here |
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Monetary Policy
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| Monetary Policy Publications/Documents |
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Introduction and Objectives
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As enshrined in DAB law (Article 2, Para.1), the primary objective of DAB is to
achieve and to maintain domestic price stability. Monetary Policy Department of DAB
primarily targets reserve money under the PRGF-extended credit facility to formulate
and to execute a robust, sound and prudent monetary policy to achieve its primary objective.
The objective of domestic price stability refers to the general level of prices in the economy
and implies avoiding both prolonged inflation and deflation. By maintaining domestic
price stability DAB contributes to broader economic goals by reducing poverty and
ensuring sustained economic growth and development which is in accordance with Afghanistan
National Development Strategy (ANDS).
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2. Core Functions
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The DAB Monetary Policy Department is responsible
1.To formulate and implement a sound and robust monetary policy
2.To carry out and produce state of the art research and analysis
3.To compile economic statistics on the real, monetary, fiscal and external sectors of the economy
4.Corporate Governance Risk
The Monetary Policy Department (MPD) of Da Afghanistan Bank is responsible
for keeping a close eye on the developments of macro-variables in the economy.
Commensurate with these developments MPD prepares policy prescriptions and materials
for the monetary policy committee decisions.
Apart from formulation and implementation of monetary policy,
the department conducts research and analysis on the
developments in four sectors of the economy- namely real,
monetary, external and fiscal sectors. These research and
analysis are published in the quarterly and annual bulletins of the DAB.
The MPD also compiles the statistics on aggregate monetary and fiscal developments (MFS),
exchange rates, international transactions reporting system (ITRS) remittances, foreign direct
investment (FDI) and broadly Afghanistans Balance of Payments (BOP).
The MPD also prepares/contributes to reports of DAB presented to/prepared for the parliament, Presidents Office and other key ministry.
The MPD is the focal point of DAB for international financial institutions (IFIs), notably the International Monetary Fund IMF.
The Department prepares and submits regular data and reports on the state of quantitative and indicative benchmarks to
IMF-agreed upon by both parties under Extended Credit Facility (ECF) program for Afghanistan.
Under the program, DAB provides information on economic, financial and socio-demographic data,
which is called General Data Dissemination System (GDDS)
The MPD also contributes to articles published in Bank Magazine, a bilingual monthly magazine in Pashto and Dari, on latest developments in the economy of Afghanistan and DAB.
MPD works in close cooperation with the Ministry of Finance (MOF) to coordinate issues related to fiscal-monetary policy coordination, cash management, etc.
Recently a macroeconomic policy working group has been established to deepen and widen the coordination between DAB and MOF.
The MPD also conducts/contributes to trainings organized by DAB Training Center for DAB staff to develop capacity inside the bank
and for the interns coming from universities to increase their knowledge of central banking, economics and monetary policy
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Monetary Policy Instruments
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Currently, DAB has at its disposal a set of monetary policy instruments for the conduct of monetary policy,
but the main reliance is on open market operations. The instruments are explained as follows:
1. Open Market Operations
2. Foreign Exchange Auction
DAB conducts foreign exchange auction twice a week to control
liquidity situation in the domestic markets and also to keep currency in circulation at a desirable level and
fulfill demand of domestic currency in Kabul and other provinces. Eligible participants in foreign exchange auction
are commercial banks and money service providers (MSPs).
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Capital Notes Auction
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Capital note is another important monetary policy tool for the DAB to manage liquidity in the domestic financial markets,
target reserve money and secure place for commercial banks to invest their excess reserve with DAB when there are no other alternatives.
Capital notes auction is conducted on weekly basis to commercial banks and MSPs.
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Standing Facility
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DAB provides two standing facilities; overnight deposits facility and overnight credit facility to commercial banks.
Both standing facilities are available to counterparties at their own initiative and both facilities have overnight maturity.
In overnight deposit facility commercial banks may place funds overnight with the DAB at a rate below market rate
(Currently 1 percent below the most recent 28 day capital notes).
In overnight credit facility commercial banks may borrow on demand from the DAB against collateral in the form of capital notes
to avoid financial risk and at a punitive rate (currently 3.5 percent above the most recent 28 day capital notes).
DAB charges such a high interest rate on overnight credit facility in order to promote inters bank lending.
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Required Reserve Ratio
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DAB does not frequently change required reserve ratio, but currently it stands at 8 percent in the form of remunerated deposits
(1 percent below the most recent 28 day capital notes) with DAB and dominated in local currency for local currency denominated
deposits and in U.S. dollar for foreign currency deposits.
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