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E-TJERA

The euro exchange rate starts the week falling, near its historical minimum

Politiko 2025-05-19 14:32:43

The Euro/Lek exchange rate has started the week with a significant decline. According to the official exchange rate of the Bank of Albania, the Euro was exchanged on Monday for 98.11 Lek, down 0.45 Lek compared to last week.

In fact, the Euro's decline in the foreign exchange market was escalating during the second half of last week. However, since Thursday and Friday were holidays for the state administration, the official exchange rate had not been updated by the Bank of Albania since last Wednesday.

In the first days of last week, the Euro recorded an increase, linked to a temporary increase in demand in the foreign exchange market. But, as has usually happened in recent years, this increase did not last long and within a few days the European currency returned to values similar to the beginning of last week.

Starting from the second half of April, the Euro-Lek exchange rate has undergone a downward shift. Data from recent years show that such a decline is more or less common and is related to the increase in foreign exchange inflows, especially related to the increase in the number of foreign visitors. However, some agents do not rule out a temporary impact of the election campaign on the exchange rate, based on the perception that this period is associated with a higher turnover of foreign currency.

Currently, the Euro-Lek exchange rate is near the threshold of 98 lek and at the same time the lowest historical value, which was recorded on May 6, at the level of 97.99 lek.

The signals from the exchange rate indicate that this year too the market will exert downward pressure on the European currency. After a first quarter at more stable levels, the second quarter, as expected, has started with the depreciation of the Euro. Agents believe that this is a consequence of a more extended tourist season, which brings an increase in foreign exchange inflows even before the start of summer.

Even the tight fiscal policy, with large surpluses, of recent years tends to tighten the supply of Lek over the months, adding to the pressure for appreciation of the local currency. By the end of the quarter, the budget was again in significant surplus, at almost 34 billion Lek, with a further increase of 4% compared to the same period a year earlier.

Last year, further depreciation of the Euro was curbed through large and unprecedented purchases by the Bank of Albania. The Central Bank purchased approximately 933 million euros in the domestic foreign exchange market in 2024, at the highest historical value.

Given that inflation continues to remain below the 3% target, it can be expected that the Bank of Albania will continue to pursue a similar strategy this year, to limit the strengthening of the Lek./ Monitor