Deposits in US dollars saw a strong increase at the end of last year.

According to data from the Bank of Albania, deposits in the greenback reached the value of 753 million dollars, up by 5% compared to November and by 10% compared to the end of 2022.

These figures indicate that the strong growth in foreign currency savings has not only affected the dominant euro but has also extended to the dollar, which is the second most widely used foreign currency within the Albanian economy and financial sector.

The majority of deposits in US dollars belong to individuals. At the end of last year, they held about 61% of the total currency deposits. The annual growth of individual dollar deposits reached 16.4%, significantly higher than the average growth of deposits in the American currency.

In theory, it can be hypothesized that the significant increase in US dollar interest rates last year may have made the dollar more attractive for financial investments. According to information reported by commercial banks to the Bank of Albania, interest rates on US dollar deposits in January of this year reached up to 2.7% for longer maturities.

However, the financial market also offers other investment opportunities, such as investment funds or participation in investments through foreign platforms, including financial instruments of the capital market or cryptocurrencies. In the last months of last year, the leading cryptocurrency, bitcoin, saw a strong increase, reaching over 47,000 US dollars in December.

It can be assumed that in such an environment, some investors may have benefited from the price increase to liquidate crypto assets and reinvest funds, which would rank the cryptocurrency market as one of the factors that may have led to the increase in US dollar deposits.

Another source believed to have reached considerable levels in recent years are outsourcing services from businesses or individuals to American companies or other non-EU countries that use the dollar as the international payment currency.

In the business segment, US dollar inflows are mainly linked to exports of goods quoted in dollars or exports to countries outside Europe.

Meanwhile, euro deposits marked another strong increase last year. According to statistics from the Bank of Albania, the value of euro deposits at the end of December reached the highest historical value of 7.3 billion euros.

Although the growth slowed significantly in December, the full-year balance for 2023 resulted in an increase of 15.6%. During the year, deposits in foreign currency in the Albanian banking sector increased by 983 million euros. It is estimated that the growth of currency deposits is directly linked to the increase in foreign currency inflows into the economy, particularly related to the tourism sector.