Volatility and Stability of AFN/USD Exchange Rate after August 2021

Irfan Ullah Stanikzai

doi:10.65921/zhbvs297

Authors

Irfan Ullah Stanikzai Rokhan University Author

DOI:

https://doi.org/10.65921/zhbvs297

Keywords:

afghani currency, exchange rate, instability, stability, volatility

Abstract

This study examines the volatility and stability of the AFN/USD exchange rate in Afghanistan following the political regime change in August 2021. Exchange rate stability is an important indicator of macroeconomic performance because persistent volatility can create uncertainty, weaken investor confidence, and affect economic activities. The main objective of the study is to measure exchange rate volatility, analyze yearly changes in volatility and exchange rate returns, evaluate exchange rate stability across different periods, and identify trends in exchange rate behavior after 2021.

Methodology: The study employs a quantitative time-series research design using monthly AFN/USD exchange rate data from August 2021 to April 2026. Volatility is measured using rolling standard deviation, supported by descriptive statistical analysis to examine fluctuations, exchange rate returns, and overall trends.

Results: The findings reveal that the AFN/USD exchange rate experienced moderate to high volatility immediately after August 2021 due to economic uncertainty and structural shocks. Volatility increased during 2022-2023, indicating greater instability, while a relative decline in volatility during 2024-2025 suggests partial stabilization. However, the results also show renewed volatility in early 2026, reflecting continued uncertainty in the Afghan economy.

Conclusions: The study concludes that exchange rate stability in Afghanistan remains fragile and highly influenced by external factors, policy controls, and domestic economic conditions.

Recommendations: The research highlights the need for stronger monetary frameworks, improved financial sector resilience, and greater economic diversification to reduce exchange rate volatility and support long-term economic stability. Spaced, Centered, Inverted triangle

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