Taliban engages in talks with Russia and China for local currency trade

The Taliban administration is in advanced discussions with Russian banks to settle trade transactions in local currencies. According to Afghanistan’s acting commerce minister, these transactions could be worth hundreds of millions of dollars and are part of an effort to reduce dependency on foreign currency amid ongoing sanctions.

Afghanistan has also presented a similar proposal to China. Minister Haji Nooruddin Azizi explained that initial discussions have taken place with the Chinese embassy in Kabul, and technical teams from both Afghanistan and China are working on the details.

“We are currently engaged in specialized talks while considering regional and global economic conditions, sanctions, and the current challenges in Afghanistan, as well as those faced by Russia,” Azizi said during an interview in his Kabul office. He added that technical discussions are well underway.

Azizi noted that annual bilateral trade between Russia and Afghanistan is approximately $300 million and is expected to grow significantly with further investment. He mentioned that Afghanistan plans to import more petroleum products and plastics from Russia, adding, “I am confident that this is a very good option that will benefit our people and our country.”

He also highlighted plans to explore similar opportunities with China, where Afghanistan already maintains roughly $1 billion in annual trade. A dedicated working team, composed of members from Afghanistan’s Ministry of Commerce and the Chinese embassy, has been formed, and discussions are ongoing.

Due to sanctions placed on key Taliban leaders since their takeover in 2021, Afghanistan’s financial sector has largely been cut off from the global banking system. Meanwhile, broader geopolitical tensions — including rivalry with China and repercussions from Russia’s war in Ukraine — have led to renewed questions about the dollar’s dominance.

Russian President Vladimir Putin recently questioned the need for states to hold large reserves in foreign currencies, arguing that domestic investment might be a more attractive option. The U.S. dollar still controls commodity trading, limiting market access for producer nations ranging from Russia to Venezuela and Iran.

Since 2022, Afghanistan has begun importing gas, oil, and wheat from Russia, marking its first major economic deal since the Taliban's return to power amid increased international isolation. Moreover, significant cuts to U.S. aid have meant that far fewer dollars — especially cash used for humanitarian operations — are entering the country.

Although the Afghani has remained relatively stable for now, economists warn that future challenges may arise. Azizi expressed optimism that strengthening international investment ties and leveraging support from the Afghan diaspora will help maintain currency stability and prevent a shortage of U.S. dollars.