The euro began the week with a decline in its exchange rate against the Albanian lek.
Data from the Bank of Albania reveals that the euro dropped below the 107 lek mark for the first time since August 23. It was traded at 106.87 lek, marking a decrease of 0.45 lek from the previous week’s close. In comparison to August 25, when it reached its highest level in the past three months, the euro-to-lek exchange rate has experienced a 3.71-point decrease.
Currency exchange agents report that the supply of the euro remains abundant, while demand has been gradually decreasing following a sharp spike at the end of August. Experts believe that the surge in demand was a temporary phenomenon, and many economic entities may have made advance purchases, anticipating a strengthening of the euro after September.
However, such a strengthening has not materialized. If many entities already met their short-term currency needs in August, it is understandable that demand has been gradually diminishing over the past two weeks.
On the other hand, foreign exchange inflows remain high, even after the conclusion of the summer season. Experts note that in recent years, the summer season has significantly extended in duration and is no longer confined solely to the July-August period.
The impact of tourism on the exchange rate is now noticeable in the months of June and September. Indirectly, this is supported by assessments from tourism operators who have reported high utilization of hotel capacities even in September.
This situation has led to the gradual reduction of the strong euro seen at the end of August.
Other major currencies have also begun the week on a downward trajectory. The US dollar dipped below the 100 lek mark and was traded at 99.68 lek. Similarly, the British pound fell below the 125 lek level for the first time in three weeks, exchanging at 124.85 lek.
The robust Albanian lek exchange rate plays a crucial role in mitigating inflationary pressures from abroad. Furthermore, the strengthening of the local currency against the euro has positively impacted the budgets of households and entities with loans in the European currency and income in lek. The lek’s advantage has offset the significant increase in interest rates on variable-rate euro loans.
However, the strengthening of the lek is having adverse effects on export-oriented sectors, particularly assembly industries. An analysis published earlier this month estimated losses of approximately 35 million euros due to the lek’s strength in the first half of this year.
