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Ex-king of Afghanistan is king of the currencies

Mohammad Zahir Shah may be the ex-king of Afghanistan, but he was still the king of the currencies on Thursday as the war-ravaged country experienced the latest in a string of crises.

Rumours that the ageing former monarch might have a role to play in any change of government in his homeland has boosted the Afghani currency, especially the rate for rarely used bills printed during his reign that carry his picture.

"Rates have been improving because people think the king will do something," said money changer Haji Mohammad Rafi.

"There is a 100 per cent premium on the Shah money, but it is not used much any more because there are so few bills left," said Rafi, who has been trading money for 14 years in the Pakistani frontier town and trading hub of Peshawar.

The latest Afghan crisis is centered on a possible attack by the United States if the ruling Taleban do not hand over Saudi-born dissident Osama bin Laden, accused by Washington of masterminding the September 11 attacks on the United States.

Speculation that the crisis could lead to a change of government has strengthened the Afghani in recent days.

The beleaguered currency fell to 78,500 to one US dollar shortly after the attacks on New York and Washington, but had recovered by Wednesday to about 55,000 to 60,000, near levels it was trading at before the attacks.

Bills that carry the king's picture are rare because none have been printed in decades. And with the biggest denomination note just 1,000 Afghanis, the bill is scarcely practical when a stack would be needed to buy just one dollar.

"You can use them if you want, but they're mostly souvenirs," said Rafi, operating on the edge of a courtyard where money changers haggled over rates before sealing a deal with a clap of hands.

The ex-king, who has lived in exile in Rome since he was overthrown in 1973, has ruled out trying to restore the monarchy but has offered to play a role in establishing a transitional government should the Taleban be pushed out of power by any US attacks in the hunt for bin Laden.

"It has been better the last several days because people think there will be some sort of change," said Abduluah Khan.

Opposition Northern Alliance

But Khan said dealers were also worried because Afghanis are printed in Russia, a throwback to the decade-long Soviet invasion, and are used to fund the opposition Northern Alliance.

"The Northern Alliance has a lot of currency, so the rate could deteriorate," said Haji Khalid.

The money is smuggled from opposition areas through the north of Pakistan to Peshawar, where the bills -- usually in denominations of 5,000 and 10,000 -- then enter circulation in Afghanistan.

Rafi said a money transfer system to Afghanistan, which does not have a functioning banking system, was still in place, and he could send money to almost any city in the country.

"Pounds, marks, no problem," he said.

The money is handed over in Peshawar, and Rafi makes a call to Kabul where the same currency or the equivalent in Afghanis or Pakistani rupees is handed over to the recipient - a system known as hawala. He sends about $3,000 worth a day, a huge amount considering a teacher in Kabul may be paid only $8 a month.

The money market in Peshawar is closely linked to Kabul's main Shahzada (prince) money market, which has survived 22 years of war and a disappearing economy that has forced the Afghani down to its current levels from about 200 to the dollar in the early 1990s.

The Afghani has strengthened as prices of essentials have soared as people stockpile food and fuel in case the standoff with the United States drags on.

And it could strengthen further amid fears of food shortages following the withdrawal of Western aid agencies after the Taleban said they could not guarantee aid workers' safety.

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