Running a central bank with the Taliban at the door – with Ajmal Ahmady

Ajmal Ahmady, until recently the governor of the central bank of Afghanistan, explains how he went about filtering out an increasingly chaotic environment to deliver the bank’s various targets


Juan Torres Rodriguez

Juan Torres Rodriguez

Fund Manager, Equity Value

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Amid the many inches and hours of media coverage of the Taliban’s stunningly swift return to power in Afghanistan, relatively little attention has been paid to the country’s finances. As such it was fascinating to hear from our latest guest on The Value Perspective podcast, Ajmal Ahmady, who – until Kabul fell on 15 August – was acting governor of the country’s central bank, Da Afghanistan Bank (DAB).


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Ahmady’s family emigrated from Afghanistan not long after he was born, ultimately settling in the US. After gaining a dual degree in international development and business from Harvard, Ahmady spent eight years in asset management before, in 2003, returning to Afghanistan – first as a senior economic adviser and then as acting minister of industry and commerce. In June 2020, he was appointed to head up the central bank.

Chaotic environment

One of Ahmady’s achievements during his short tenure was to stabilise the country’s currency – and, in light of our underlying theme of decision-making in conditions of uncertainty, this example of ‘making the uncertain certain’ was always going to catch our eye, here on The Value Perspective. How did he manage to filter out what must have been an increasingly chaotic environment to deliver the DAB’s various targets?

“In common with most central banks around the world, the central bank has an inflation-targeting mandate,” Ahmady replies. “That was the key component and so, when you take a look at our reaction function, one of the key drivers of inflation is currency movement – because Afghanistan imports so much, we ran a very large trade deficit.

“So we did not explicitly target the currency rate but we monitored it very closely on a day-to-day basis. And we had a few monetary policy tools we utilised, including foreign exchange auctions and DAB note auctions, in order to ensure our monetary policy targets were met. That is maybe the typical framework a central bank uses and it is the one we utilised.”

International reserves

As conditions began to worsen in Afghanistan, Ahmady was keen not to introduce macroeconomic instability into an environment of already high – and worsening – political and security uncertainty. “At the same time, we had to balance a competing set of objectives,” he adds. “On the one hand, we wanted to reduce currency volatility and, on the other, we had to make sure any action we took did not deplete our international reserves.

“At the end of the day, I think I can justifiably say currency volatility remained low – it did not appreciate by more than 5% – and we were left with more than $9bn [£7bn] in international reserves. By any common reserve metrics, that can be seen as sufficient as it represents approximately 14 months of international reserves or about 50% of GDP, which are quite large figures.

“In sum, then, when you look at the situation of Afghanistan, I would say it was not really a macroeconomic crisis – as you have in Syria and Lebanon and a number of other countries. We were able to maintain that macroeconomic stability but, unfortunately, the political and security conditions continued to deteriorate.” We will look at the endgame of that situation in more detail in Reliable information and Evolving processes.


Juan Torres Rodriguez

Juan Torres Rodriguez

Fund Manager, Equity Value

I joined Schroders in January 2017 as a member of the Global Value Investment team and manage Emerging Market Value. Prior to joining Schroders I worked for the Global Emerging Markets value and income funds at Pictet Asset Management with responsibility over different sectors, among those Consumer, Telecoms and Utilities. Before joining Pictet, I was a member of the Customs Solution Group at HOLT Credit Suisse.  

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