Savings in foreign currency recorded a record increase of 286 million euros in August, deposits in Lek continue to fall
Although the local currency is Lek, and the income of most families and individuals is in Lek, the preferred currency for saving remains the Euro.
The flow of immigrants, which culminates in August, the income from tourism, or the conversion of a part of savings from Lek to Euro, have caused foreign currency deposits to record a record increase in the month of August. On the contrary, savings in local currency have followed the shrinking trend.
According to the Bank of Albania, at the end of August, the stock of deposits in Lek decreased to 540 billion ALL, with a decrease of 0.9% compared to the same period a year ago, or 5 billion ALL less.
This is the strongest contraction since April. During this year, savings in Lek increased only in January and April, while in total, for 8 months, they fell by 10.7 billion Lek, or 2% less (August 2023 compared to December 2022).
Despite the increasing trend of interest rates in the last year, as a result of the restrictive monetary policy of the Bank of Albania, which increased the base rate several times to curb inflation, deposits in Lek have not seen any significant expansion. On an annual basis, savings in Lek increased by only 0.27%.
This may reflect both the inability to save, due to very high growth rates of prices in relation to income, as well as the channeling of investments in government securities, which had higher interest rates than deposits, as well as the fact that part of the deposits in Lek are being converted into Euro due to the favorable exchange rate.
The data of the Bank of Albania show that the contraction has come entirely from the deposits of individuals (-6.8 billion ALL for term savings), while those of businesses have increased, somewhat amortizing the reduction of individuals).
Currency savings increase by 286 million euros
Unlike the savings in Lek, those in foreign currency have recorded steady growth in recent years. (Monitor is reporting the foreign currency deposits from the special statistics for the euro, which prevails, since the total data of the Bank of Albania's deposits are given in lek, which reduces the value of savings in Euro due to the significant devaluation of the common currency) .
At the end of August, the stock of savings in euros reached 7.1 billion euros, with an increase of 4.2% compared to the previous month, or 286 million euros more. This is the largest monthly increase since the Bank of Albania reports the data, from December 2015. Savings of individuals have influenced almost 60% of the increase.
On an annual basis, deposits in euros have increased by 16.5%, or 1 billion euros more.
In July and August, foreign currency deposits always show strong growth influenced by the inflow of immigrants.
In recent years, the good performance of tourism has also had an impact, which brings more foreign currency to the country both through consumption, the hotel industry, as well as individuals who rent out houses by the day, a trend that is getting stronger and stronger. especially in the summer months./Monitor