Eurozone worries weigh on war-weary Afghans
KABUL (Reuters) - Kabul's Shahzada money market and its crush of bearded traders thumbing crumpled piles of cash is a world away from Europe, but Eurozone worries and a meeting of rich nation leaders in Mexico cut through even Afghanistan's decade-long insurgent war.
As polls opened in Greece for an election that could decide whether the heavily indebted country remains in the euro zone, currency traders and bankers in the three-storey warren of shops were trying to divine the single currency's future.
"Most people are nervous. Right now, the people most afraid are the ones dealing in the euro currency," said the market's Afghan United Bank branch manager Muneer Zazai as beside him stacks of $100 bills blurred through a counting machine.
As one of the world's poorest nations, with a third of the 30 million population living under the poverty line, Afghanistan is relatively isolated from events shaking markets elsewhere.
But as Western countries look to pull most combat troops from Afghanistan by the end of 2014 and aid worth almost $16 billion a year winds back, Afghans are worried about an economic meltdown both at home and abroad.
Afghans have for years locked their wealth in overseas banks and property, with Dubai and its man-made Palm Jumeirah island favoured locations. Some $8 billion is thought to be stashed away in the Arab emirate, with Germany also a favourite haven.
At the head office of the country's most profitable private bank, Afghanistan International Bank (AIB), chief executive Khalil Sediq said his bank was watching the G20 and re-evaluating where to put its $700 million deposit base.
"Our bank, we are worried because we are 85 percent liquid. It means that we have to place our liquidity overseas in foreign banks," Sediq told Reuters.
"In considering this crisis and that every month or every week, a major bank is downgraded, now we don't know where is a safe place, how to place our liquidity somewhere so as to not be damaged."
Afghanistan's own banking system was shaken in 2010 when depositors pulled millions of dollars out of Kabul Bank, the country's biggest private financial institution, after learning that senior executives had lost $300 million, mostly in failed real estate investments in Dubai.
Sediq, a former governor of Afghanistan's Central Bank, said the worsening economic outlook in Europe, including discussion on a bailout for Spain's troubled banks, had shaken his confidence even in AAA-rated investments.
"Very reputed banks, very credible banks, have been affected by that and are facing problems. We are not very much certain about the future of Europe, what will happen to Europe," he said. "I believe there is no way but to bail out these banks."
And with his own bank sitting on assets worth more than $800 million, Sediq said he hoped Group of 20 wealthy nation leaders meeting in Mexico would agree on a solution which would help calm jittery investment markets.
"As soon as they do it will be much better for the system, and it will bring more trust and assurances to the people. We are expecting that this G20 will come out with good policies and practical ways to solve the current crisis," he said.
Najeebullah Akhtary, the Shahzada Money Market's president for money exchange union, said as an importing country, the crisis overseas would worry mainly Afghanistan's small pool of very wealthy investors.
"In general, our economy can be mostly affected by our neighbouring countries Iran and Pakistan," he said.
But as traders crowded around lunchtime cooking pots in Shahzada's central courtyard, Humayun - a chief cashier at Zazai's Afghan United Bank - said business was definitely less chaotic than usual.
"If there is crises in any country related to the euro or the U.S. dollar, it affects our Afghani currency," he said.
"Right now, with preparations for elections in Greece, the Euro rate has decreased and it's made businesses down in Afghanistan."
(Editing by Ron Popeski)
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