Euro is gaining momentum in its exchange rate against the Albanian lek. According to the official exchange rate of the Bank of Albania, on Wednesday, the euro was traded at 102.22 Albanian lek, marking a rise of 1.15 lek compared to the previous day.
After hitting a historical low of 101.09 Albanian lek last Tuesday, the European currency has experienced a partial recovery, starting from Thursday when the Bank of Albania conducted its regular auction for euro purchases.
The auction on Thursday was part of the annual procurement calendar for meeting the foreign exchange reserve needs. A similar approach was also observed last month.
Throughout this week, some commercial banks have also made currency purchases, possibly to meet their clients’ demands. Experts speculate that many entities might have waited for the euro to approach the 100 lek exchange mark before making their purchases.
Consequently, the increased demand in recent days has surpassed the high seasonal supply of the currency. This behavior could explain the somewhat paradoxical trend of the exchange rate, which is increasing precisely in the last days of July, whereas in previous years, the seasonal decline reached its lowest point.
This year, it is not the first instance where the euro has alternated between periods of significant decline and rapid short-term rebounds, primarily attributed to opportunistic behavior by entities seeking to buy euro when its value drops, thus increasing the demand.
However, this exchange rate dynamic does not rule out potential speculative behavior in the short term, especially from powerful market players.
The recent rise of the euro has also partly influenced the exchange rate of other major currencies. The US dollar was traded at 92.35 lek, marking an increase of 2.41 lek compared to a week ago. The British pound was exchanged on Wednesday at 119.12 lek, rising by 3.4 lek compared to the historic low it reached last Thursday.
For the moment, the robust appreciation of the local currency seems to be in a corrective phase.
Nevertheless, fundamental market factors appear to be supporting the strong Albanian lek in the short term. Statistics have shown that tourist arrivals for the first half of this year reached a record level, and tourism revenues are expected to remain high, at least until the end of the summer season.
On a year-to-year basis, the euro-lek exchange rate remains in double-digit decline, down by 12.3% compared to the same period a year ago.
