KARACHI: Pakistani traders said on Friday the country’s bilateral trade with Afghanistan had declined by 50 percent since they were not sure which currency had to be used to facilitate business activities between the two countries.
Afghanistan has been facing an acute shortage of US dollars since the withdrawal of international forces last month.
The country lost its connection with foreign banks and donor agencies after the Taliban takeover, creating fears of an economic implosion that could lead to another humanitarian crisis and refugee influx in the region.
Pakistan’s finance minister Shaukat Tarin told a Senate standing committee earlier this month the bilateral trade between the two countries would be carried out in Pakistan’s national currency, though the country’s central bank has not notified the decision as yet.
“The State Bank of Pakistan has not issued the notification to facilitate trade in Pak rupee despite the announcement by the finance minister, causing the bilateral trade to suffer,” Muhammad Zubair Motiwala, chairman Pakistan-Afghanistan Joint Chamber of Commerce and Industry, told the seventh annual general meeting of the body in Karachi. “The trade has declined by about 50 percent and we fear it may completely stop if appropriate measures are not taken now.”
The Pakistani rupee on Wednesday hit an all-time low of Rs169.12 against the US dollar primarily due to the flight of the American currency to Afghanistan. Local currency traders told Arab News earlier this month about $2 million were going to Afghanistan from Pakistan on a daily basis.

Motiwala told the forum that Afghan businessmen were willing to use the Pakistani currency as a temporary arrangement since they are aware of the depleting dollar reserves of their country.
“It is time we moved forward to increase our export footprint in Afghanistan,” he said. “Pakistan has a golden chance to increase its exports and avail the opportunity to make Afghanistan its second largest export destination.”
The highest export volume from Pakistan to Afghanistan was recorded at $2.7 billion in 2010-11. The trade in the subsequent years remained below $1 billion since Indian exporters aggressively marketed their products after leveraging their government’s favorable relations with the previous administrations in Kabul, said local traders attending the business gathering.
“With a relatively more friendly government in Afghanistan, we can be hopeful to increase our bilateral trade,” Motiwala said. “We can easily enhance our trade to $10 billion in the long run and $5 billion within the next couple of years.”
Speaking at the occasion, Shahid Hussain from the Sarhad Chamber of Commerce and Industry said even the transit trade with Afghanistan had declined.
“The Afghan traders are not in position to import as they are required to make payments in dollars and they don’t have the American currency anymore,” he said. “Exports from Pakistan, on the other hand, are taking place at a limited scale which must be rectified by the government.”