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The lek gains points against the euro; the first effects of raising the key interest rate?

Politiko 2022-03-25 08:03:06

The lek gains points against the euro; the first effects of raising the key

The increase of the key interest rate by the Bank of Albania on Wednesday seems to have started to give the first signals of reflection in the financial market.

On Thursday, the lek appreciated by about 0.3 points in the euro exchange rate. The euro was exchanged at 122.48 lek on Thursday, marking the lowest level since March 2.

Market experts say that yesterday's decision of the Bank of Albania may have had an impact in favor of the local currency in the foreign exchange rate. Theoretically, the key interest rate level is one of the factors influencing the exchange rate between different currencies. The increase in the key rate represents a higher price of injecting money into the system by the central bank and implies an action in the monetary tightening direction. As this action tightens the supply of the respective currency, the increase of the base rate affects its appreciation against other currencies.

In this case, the increase of the base rate of the lek against the euro deepens the gap in the base rate between the two currencies. The European Central Bank has not yet taken any steps towards raising interest rates, despite rapidly rising inflation rates in the Eurozone. To date, the ECB is the last of the largest central banks not to take steps towards monetary tightening, while counterpart institutions such as the Bank of England or the Federal Reserve have already undertaken base rate hikes.

This different approach has been one of the main factors that have influenced the depreciation of the euro in the exchange rate with other important global currencies in the last two months. The Bank of Albania's move to raise the key interest rate seems to be having such an effect on the exchange rate between the lek and the euro.

The increase in the base rate also makes the lek more attractive as a currency for keeping savings. In theory, the expectation of higher returns on deposits (and other financial investments) may push more individuals or entities to shift their savings from foreign currency to lek. This would increase the demand for lek and exert influence on the appreciation of the local currency.

Megjithatë, ekspertët mendojnë se është vështirë të thuhet në çmasë kjo lëvizje do të ketë ndikim afatgjatë në kursin e këmbimit, duke qenë se tregu valutor shqiptar është një treg i vogël dhe i ndikuar kryesisht nga raportet e brendshme të kërkesës dhe ofertës, më shumë se nga faktorë të gjerë konjukturalë. Elementi kryesor në ecurinë e kursit të këmbimit ngelet pozicioni i jashtëm i ekonomisë i shprehur në Bilancin e Pagesave. Shtrenjtimi i lëndëve të para dhe produkteve energjetike ka shtuar rreziqet për thellim të deficitit tregtar në mallra, megjithatë shpresat janë që dalja graduale nga pandemia do të ketë një efekt pozitiv në bilancin e shërbimeve dhe sidomos në sektorin e turizmit.

Mbiçmimi i monedhës i ndikon në mënyrë të ndryshme subjekt të ndryshme në ekonomi. Një mbiçmim i lekut ndikon negativisht tek ato subjekte që kanë të ardhura në valutë dhe shpenzime në lekë, kryesisht eksportuesit e mallrave dhe të shërbimeve. Një mbiçmim i lekut dëmton, të paktën pjesërisht, edhe depozituesit që i mbajnë kursimet e tyre në valutë të huaj, kryesisht në euro. Por, nga ana tjetër një monedhë vendase më e fortë favorizon subjektet që importojnë mallra dhe shërbime nga jashtë dhe huamarrësit që kanë detyrime në valutë të huaj, ndërkohë që të ardhurat i përfitojnë në lekë.

Although the direct impact of the exchange rate may be different for different actors, in the current situation the balance of factors suggests that the interest of the Albanian economy may be more for a local currency in strong positions. This will help to alleviate some of the very high inflationary pressures from foreign commodity markets. The analysis of the Bank of Albania has shown that, at least until the last quarter of last year, the appreciation of the lek in the foreign exchange rate has partially softened the reflection of the imported inflation in the Albanian economy./Monitor