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Euro starts the week in further decline, drops towards the threshold of 95 lek

Politiko 2026-06-08 16:34:43

Euro starts the week in further decline, drops towards the threshold of 95 lek

The Euro/Lek exchange rate has started the week in a further decline and has touched a new historical minimum. According to the official exchange rate of the Bank of Albania, the European currency was exchanged today for 95.19 Lekë, the lowest level ever recorded.

The Euro exchange rate now seems oriented towards the 95 lek limit, driven by the expected increase in foreign exchange supply due to the summer season.

The Euro-Lek exchange rate has fallen by 1.6% since the beginning of 2026, while on an annual basis the decline has reached 2.8%.

According to market agents, the decline of the Euro continues to be driven by a high supply of the currency in the market, while demand fails to keep up with the same pace, despite the Bank of Albania's continuous purchases.

The Central Bank has played a significant role in the foreign exchange market in the last two years, withdrawing more than two billion euros from the market. This has partially curbed the decline of the Euro, which in the absence of additional demand from the Central Bank would have reached even lower levels.

However, rising inflation could lead the Bank of Albania to a dilemma. According to official INSTAT figures, inflation reached 3% in May, which is the Central Bank's target.

Until now, interventions in the foreign exchange market were mainly motivated by the inflation objective, to curb the deflationary effect of imported inflation on consumer prices in the Albanian economy.

Now that inflation has returned to target, it is unlikely that the Bank of Albania's interventions can be based on the argument of price stability. If the Central Bank withdraws from interventions in the foreign exchange market or at least reduces these interventions, the Euro's decline is likely to continue, at least during the summer, due to the inevitable seasonal increase in supply.

Further strengthening of the Lek could make a positive contribution to controlling inflation, which is expected to continue rising due to higher fuel prices and their impact on production costs.

But, on the other hand, a further weakening of the Euro would hit the export sectors of the economy even harder, starting with tourism itself. The depreciation of the Euro reduces income in Lek and shrinks export margins, pushing them towards price increases and loss of competitiveness. /Monitor

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