Kabul, Nov 3 (AP) Afghanistan's Central Bank doubled the cap on weekly withdrawals Wednesday, a day after the Taliban government banned all foreign currency transactions.

The back-to-back decisions come at a time of a continued deterioration of the Afghan economy. The Taliban portrayed the foreign currency ban as a way of trying to stabilize economy, and warned that violators would be prosecuted.

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Others suggested the ban could be counterproductive. Much of Afghanistan's economy revolves around foreign trade, foreign aid and remittances from abroad.

The local currency, the afghani, has depreciated since the Taliban takeover of Afghanistan in August.

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After the Taliban takeover, the US froze nearly USD 9.5 billion in assets belonging to the Central Bank and stopped shipments of cash.

It was part of a pressure campaign aimed at getting Afghanistan's new rulers to respect the rights of women and minorities.

In response, bank withdrawals were capped at the equivalent of USD 200 a week. Huge crowds formed outside banks every day as Afghans tried to get money for daily needs.

On Wednesday, the Central Bank announced the cap would increase to the equivalent of USD 400 a week, or USD 1,200 a month.

The bank said those who deposit money starting Wednesday will be able to withdraw funds without restrictions.

The economic situation remains dire.

The Taliban's seizure of power resulted in an abrupt halt to most donor funds. These disbursements accounted for 45 percent of GDP and financed 75 percent of state expenditures, including public sector salaries.

In 2019, total government expenditures were nearly USD 11 billion. Humanitarian agencies say they've seen a sharp increase in hunger, with a drought and the onset of winter worsening the situation.

In addition to the economic woes, the Taliban have also been faced with a sharp rise in attacks by its main rival, the extremist group Islamic State.

Hardest-hit has been the IS stronghold of Jalalabad, the capital of the eastern province of Nangarhar.

On Wednesday, a roadside bomb struck a Taliban patrol in Jalalabad, killing two people and wounding three, witnesses said.

There was no immediate claim of responsibility, but the attack bore the hallmarks of previous IS strikes against the Taliban.

A Taliban district commander in the city confirmed the blast and said four Taliban fighters were wounded. The commander, who identified himself as Mubariz—and like many Afghans goes by one name—did not provide details about those killed in the attack, saying the investigation continues.

In recent weeks, Taliban officials have been reluctant or slow to release details about Taliban fatalities, in an apparent attempt to play down the extent of the damage being inflicted by IS.

The Jalalabad attack came a day after IS attackers set off an explosion at the gate of a 400-bed military hospital in the capital of Kabul, killing three women, a child and three Taliban guards said.

Five assailants were also killed in the attack.

Taliban officials said guards prevented the attackers from entering the hospital.

IS claimed that one of those killed in the hospital attack was a senior Taliban commander who had played a leading role in the group's August 15 takeover of Kabul. Taliban officials said they could not immediately confirm the commander had been killed.(AP)

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)