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Alexandria in the Caucasus is located to the south of Bactria, in the mountains of the Hindu Kush.

Alexandria of the Caucasus was a city founded by Alexander the Great (one of many given the name Alexandria), at an important junction of communications in the southern foothills of the Hindu Kush, in the country of the Paropamisadae. The area of the Hindu Kush was also designated as "Caucasus" in Classical times, in a parallel to its Western equivalent between Europe and Asia.

Alexander populated the city with 7,000 Macedonians, 3,000 mercenaries and thousands of natives (according to Curtius VII.3.23), or some 7,000 natives and 3,000 non-military camp followers and a quantity of Greek mercenaries (Diodorus, XVIII.83.2), in March 329 BC. He had also built forts in what is nowadays Bagram or Begram in Afghanistan, at the foot of the Hindu Kush, replacing forts erected in much the same place by Persia's king Cyrus the Great c. 500 BC.

Silver coin of the Greco-Bactrian king Eucratides (170-145 BC), mentioning Alexandria/ Kapisa.
Obv: Bust of king Eucratides. Greek legend: BASILEOS MEGALOY EUKRATIDOY "Great King Eucratides".
Rev: Divinity of Kapisa with palm in left hand, probably Zeus, extending a wreath over the head of a small elephant. Hills to the right. Kharoshthi legend: KAVISIYE NAGARA DEVATA "Divinity of the city of Kapisa".

Alexandria of the Caucasus was one of the capitals of the Indo-Greek kings (180 BC-AD 10). During the reign of Menander I the city was recorded as having a thriving Buddhist community, headed by Greek monks. In Buddhist literature, the Greek (Pali: Yona, lit: "Ionian") Buddhist monk Mahadhammarakkhita (Sanskrit: Mahadharmaraksita) is said to have come from “Alasandra” (thought to be Alexandria of the Caucasus), with 30,000 monks for the foundation ceremony of the Maha Thupa ("Great stupa") at Anuradhapura in Sri Lanka:

"From Alasanda the city of the Yonas came the thera (elder) Yona Mahadhammarakkhita with thirty thousand bhikkhus." (Mahavamsa, XXIX)

The divinity of the city seems to have been Zeus, as suggested by coins of the Greco-Bactrian king Eucratides.

Some archaeological evidence concerning Alexandria of the Caucasus was gathered by Charles Masson (1800 - 1853), providing insight into the history of that lost city. His findings include coins, rings, seals and other small objects. In the 1930s Roman Ghirshman, while conducting excavations near Bagram, found Egyptian and Syrian glassware, bronze statuettes, bowls and other objects including statues. This is an indication that Alexander's conquests have opened India to imports from the west.

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• Alexander the Great: his towns