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Afghans Trade Volatile Currency in Hopes of Making Profit

Pakistan has been affected in many ways by the war in Afghanistan.

Tucked away in the corner of the Qissa Khwani bazaar in Peshawar a swarm of men gather - shoving, shouting, bargaining, and at times even throwing punches at each other.

They are trading the Afghani, the currency of neighboring Afghanistan. The "floor of the exchange" is little more than an alley lined with tiny shops called the Chowk-e-Yadgar currency market.

Waves of excitement ripple through the throng as some traders - clutching radios or cell phones - shout out the latest headlines.

News from inside Afghanistan since the September 11 terrorist attacks on the United States has sent the currency on a rollercoaster ride of ups and down, bringing a fortune to some traders and misery to others.

Farooq Khan has been a currency trader in the Chowk-e-Yadgar market for 20 years.

He says, since the fall of the Taleban a lot of people are trading the Afghani. The prices rise and fall suddenly, so a lot of people lost out.

In U.S. dollars, the Afghani is not worth much. Traders sell the Afghani in units of 100,000 - called a lakh. On this day, one lakh is worth 200 Pakistani rupees, or $3.33.

Still, that is a better rate that before September 11 when developments signaled political turmoil in Afghanistan. One lakh was then worth $1.33.

The Afghani has been an unstable currency for decades. During the civil war that followed the withdrawal of Soviet forces in 1989, factional and tribal leaders printed a handful of currencies of their own and there was little control over how much money was being printed. That did not help the value of the Afghani.

Monetary instability is a problem the interim leader of Afghanistan, Hamid Karzai, acknowledged at a recent news conference in the Afghan capital, Kabul.

"We have great ability to print as much money as you want - that's part of the problem," he said.

The highest denomination bill is the $10 Afghani note, and that does not make things easy, especially for big traders like Fazal Maulla. Money is carried in and out of his office by the kilo, and stacks of notes reach the ceiling.

Mr. Maulla says with a bit of luck, an established trader can make $50,000 U.S. dollars in a day. Still, some traders say they hope the wild ride the Afghani has taken will end soon.

He says, if the new government prints new money of its own, then, he thinks, the currency will probably stabilize.

But until Afghanistan has a functioning banking system and financial infrastructure, there will always be plenty of business for back-alley markets like Chowk-e-Yadgar.