Analysis of the role of generations of currency crisis and the factor of bank reserve sanctions on the situation of the Afghan currency market

Document Type : Specialized scientific

Author

Head of the Department of Economics, Al-Mustafa International University, Afghanistan

10.22034/fe6.2024.100556

Abstract

In this study, with the aim of identifying the context and factors of the emergence of multiple currency crises in the Afghan currency market and providing solutions to deal with it, the roots of the three generations of currency crises along with the sanctions factor in creating currency crises in Afghanistan have been examined. The research methodology is to extract the currency crisis variable using the Hodrick-Prescott filter and empirically test the research model using the binary probit model. Based on the findings of this paper, a combination of elements of the three generations of currency crises is involved in creating the currency crisis in Afghanistan, and in addition, the sanctions variable has a catalytic effect on the role of the factors of the three generations of currency crises and intensifies the impact of conventional generations of currency crises. Based on the findings of the fitted regression model, the policy recommendations proposed by this study include issues such as import elasticity, improving the state of fundamental macroeconomic variables, combating currency hoarding and speculation, developing and expanding financial products and services between Islamic countries, and managing the exchange rate with monetary instruments.

Keywords

Two Quarteriy Economic
Volume 4, Issue 1 - Serial Number 7
September 2024
Pages 33-69

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