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KARACHI:

Bank Alfalah has decided to exit its operations in Afghanistan amid persistent political, economic and regulatory challenges in the country, a move that reflects both country-specific risks and a broader strategic shift underway across Pakistan’s banking sector.

According to a statement and market commentary, the decision comes against the backdrop of frozen Afghan foreign reserves, uncertainty surrounding international recognition of the Taliban-led government, and prolonged disruptions to cross-border trade and financial flows.

Banking sector analyst Asad Ali of Topline Securities said that, given the prevailing conditions in Afghanistan, the bank’s decision was pragmatic and largely expected.

“Amid ongoing challenges in Afghanistan, including frozen reserves and uncertainty over international recognition, the bank has decided to exit its operations in the country,” he told The Express Tribune. “The Afghanistan business was limited in scale, comprising only two branches, and the decision is not expected to have a material impact on the bank’s balance sheet.”

He added that the move should not be viewed in isolation. “Globally, banks are reassessing cross-border operations, particularly in high-risk jurisdictions. Afghanistan’s situation is one factor, but there are internal strategic reasons as well. If you look at other banks, you will see the same trend – many are closing or have already closed their foreign subsidiaries,” he said, pointing to heightened compliance costs, tighter global regulatory scrutiny and capital allocation priorities.

On January 7, 2026, Bank Alfalah moved closer to formally exiting the Afghan market, where it has operated since 2005. The State Bank of Pakistan and Da Afghanistan Bank have granted in-principle approval to Ghazanfar Bank to commence due diligence for the acquisition of Bank Alfalah’s Afghanistan operations. This follows an earlier, unsuccessful attempt to divest the unit in 2019 and signals a more definitive step toward disengagement from the Afghan financial system.

The bank’s exit coincides with a critical phase in Pakistan-Afghanistan economic relations. Secretary of the Pakistan-Afghanistan Joint Chamber of Commerce and Industry (PAJCCI), Muhammad Shoaib, said the bilateral economic relationship is at a “very sensitive juncture,” marked by a prolonged border crisis and a visible withdrawal of Pakistani financial institutions from Afghanistan.

Since October 10, 2025, major trade crossings, including Torkham, Chaman-Spin Boldak and Ghulam Khan, have remained largely closed following deadly military clashes and escalating security tensions. The three-month-long standstill has effectively paralysed bilateral trade and transit activity, severely disrupting supply chains.

Approximately 12,000 containers and thousands of trucks carrying transit goods are reportedly stranded at Karachi Port and along various border points. Traders are incurring heavy financial losses, with daily demurrage and detention charges estimated at $150 to $200 per container.

The impact has been particularly severe for Pakistan’s export-oriented sectors. The 2025-26 citrus (kinnow) season has been described by exporters as “completely damaged,” as Afghanistan typically absorbs around 60% of Pakistan’s citrus exports. With the Afghan transit route blocked, exports to Russia and Central Asian states have also stalled, leaving large quantities of produce unsold. Exports of potatoes and bananas to Central Asia have similarly come to a halt, while cement and pharmaceutical manufacturers have seen a key regional market effectively disappear.

Afghanistan, meanwhile, is facing its own economic fallout. Essential imports ordered from global markets remain stuck in Pakistan, contributing to supply shortages and rising food prices, including tomatoes, grapes and apples, in Afghan markets. Seasonal Afghan exports such as pomegranates, grapes and coal have also been restricted, resulting in significant revenue losses for local producers.

In response to the prolonged closures, Afghanistan has accelerated efforts to bypass Pakistan by developing alternative trade routes. Afghan traders are increasingly using Iran’s Chabahar port and overland corridors through Uzbekistan, Turkmenistan and Tajikistan. Iran and Afghanistan have also agreed to boost rail freight capacity on the Khaf-Herat line. Despite tensions with Pakistan, Afghanistan’s total trade volume reportedly reached around $14 billion in 2025, suggesting that alternative routes are partially offsetting the disruption.

Addressing the border situation, DG ISPR Lt Gen Ahmed Sharif recently stated that Pakistan’s trade and cross-border movement are restricted due to security concerns, emphasising that national security remains the state’s top priority.

KARACHI:

Pakistan’s latest government securities auctions attracted strong investor interest on Wednesday, with the State Bank of Pakistan (SBP) raising a total of Rs1.09 trillion through treasury bills and Pakistan Investment Bonds (PIB) Floaters, while cut-off yields declined across all T-bill tenors.

In the treasury bills auction, the government accepted Rs979 billion against a cumulative target of Rs850 billion, whereas total bids amounted to Rs2.56 trillion.

The government accepted Rs87 billion for one-month T-bills at a cut-off yield of 10.20%, marking a decline of 29 basis points from the previous auction. In the three-month tenor, Rs80 billion was accepted against bids of Rs521 billion, with the cut-off yield easing 34 basis points to 10.15%.

The six-month paper saw acceptance of Rs52 billion out of bids worth Rs404 billion as the cut-off yield fell 32 basis points to 10.16%. The bulk of the auction was concentrated in 12-month papers, where the government raised Rs761 billion against bids of Rs1.38 trillion at a cut-off yield of 10.16%, down 33 basis points from the previous auction.

Weighted average yields were largely in line with the cut-off yields, indicating consistent bidding across tenors.

Meanwhile, in the 10-year Pakistan Investment Bonds (Floating Rate – Semi-Annual) auction, the government accepted Rs108 billion against a target of Rs50 billion, while total bids stood at Rs758 billion. The cut-off price was set at 97.20, translating into a cut-off rate of 10.93%. The spread over the benchmark narrowed to 47 basis points, compared with 63 basis points in the previous auction.

Furthermore, the Pakistani rupee edged up slightly against the US dollar on Wednesday, closing at 280.06 in the inter-bank market compared to 280.07 a day earlier.

Meanwhile, gold prices in Pakistan fell, following international market losses as investors booked profits after a recent rally amid mixed global economic signals. Locally, gold per tola dropped by Rs1,200 to Rs466,762, while 10-gram rate fell by Rs1,028 to Rs400,173, according to the All-Pakistan Gems and Jewellers Sarafa Association.

A day earlier, gold had surged by Rs3,200 per tola, reflecting volatility driven by global price movements. Silver, however, remained stable at Rs8,361 per tola.

Internationally, gold slipped over 1% as profit-taking intensified, though weaker-than-expected US private payroll data bolstered expectations of potential Federal Reserve rate cuts. Spot gold touched $4,445 per ounce, up from an earlier low of $4,422. Analysts noted the market remained range bound, with $4,500 and $4,423 being high and low levels, respectively.

Adnan Agar of Interactive Commodities highlighted that Friday’s US non-farm payroll data could trigger significant price movements, while silver pulled back from recent highs near $82 to around $77.

The IWF’s Ngaire Alexander told the BBC tools like Grok now risked “bringing sexual AI imagery of children into the mainstream”.

He said the material would be classified as Category C under UK law – the lowest severity of criminal material.

But he said the user who uploaded it had then used a different AI tool, not made by xAI, to create a Category A image – the most serious category.

“We are extremely concerned about the ease and speed with which people can apparently generate photo-realistic child sexual abuse material (CSAM),” he said.

The charity, which aims to remove child sexual abuse material, external from the internet, operates a hotline where suspected CSAM can be reported, and employs analysts who assess the legality and severity of that material.

Its analysts found the material by on the dark web – the images were not found on the social media platform X.

X and xAI were previously contacted by Ofcom, following reports Grok can be used to make “sexualised images of children” and undress women.

The BBC has seen several examples on the social media platform X of people asking the chatbot to alter real images to make women appear in bikinis without their consent, as well as putting them in sexual situations.

The IWF said it had received reports of such images on X, however these had not so far been assessed to have met the legal definition of CSAM.

In a previous statement, X said: “We take action against illegal content on X, including CSAM, by removing it, permanently suspending accounts, and working with local governments and law enforcement as necessary.

“Anyone using or prompting Grok to make illegal content will suffer the same consequences as if they upload illegal content.”