Afghan Chaos: Which Currency Is in Adversity?

Turbulence in Afghanistan takes place as expected. However, it is raging so rapidly, shocking the financial market and worsening involved peoples anxiety. What are the impacts made by the Afghan situation as an existing fact？

To begin with, the fundamental reason for the Taliban takeover in a breeze is that Afghan army soldiers have surrendered without fighting because they were unwilling to fall into a civil war. The absence of fierce warfare between Taliban and Afghan civilians and forces can lead the situation to calm down very soon without continuous conflicts. Basically, the U.S. troops have pulled out of Afghanistan, indicative of them attempting to be uninvolved in Afghan affairs. It is believed that the Taliban that returns to power wont use confrontation to irritate the American military. If the situation is eased, the likelihood of gold prices being prejudiced will be maximal. However, the American withdrawal from intervening in Afghan domestic affairs is conducive to the U.S. and USD.

Nevertheless, if the U.S.-Taliban war breaks out because the defiant Taliban chooses revenge, the situation will be unfavorable to USD but favorable to gold prices.

What‘s more, it is estimated that a certain number of Afghans won’t adapt themselves to the brutal governance carried out by the Taliban after the U.S. administration for two decades, thus fleeing the country as refugees, regardless of the situation moderating or escalating. It will lead neighbor countries to a massive humanitarian crisis regarding refugees, including China, Pakistan, Iran, Turkmenistan, Uzbekistan, and Tajikistan. It is expected that these neighboring states will see myriads of Afghan refugees.

According to reports, these refugees aim to arrive in Europe via Iran and Turkmenistan, making many European countries wait in the wings. These nations witnessed hundreds of thousands of refugees from war-torn regions, including Syria and some African countries. The refugee crisis is also one of the reasons for Brexit. Currently, it is estimated that more pressure will be inflicted on weak Europe under the context of a new Afghan refugee crisis on the horizon.

With the Bundestag election scheduled for September 26th, if this crisis exacerbates, it will benefit the Alternative for Germany (AfD) party instead of EUR. However, owing to Brexit, this won‘t strike the U.K. so hard as it doesn’t need to accept refugees as required by the regulations and rules of the European Union (EU). Afghan refugees are more likely to choose Germany, France, or Southern European countries as their destinations, thereby imposing severe pressure on the economy in these regions and worsening the financial deficit. If this trend is cut-and-dried, the European Central Bank (ECB) will face difficulties in delisting in the short run, let alone interest-rate hikes, which is unfavorable to the EUR aftermarket.