 |
| The graph of the fluctuation of the lek and the euro, Lek to 1 euro exchange rate, January 2001 - December 2023 |
The Euro has ended the week with a further decline in the exchange rate against the Lek. According to the official exchange rate of the Bank of Albania, the Euro was traded on Friday at 101.17 Lek, losing 0.75 points compared to the previous day. The exchange rate between the Euro and the Lek has reached its lowest level since July 25 of this year. Currently, the rate is very close to the historical minimum level of 100.49 Lek, recorded on July 20 of this year, Monitor reports.
The Lek continued to strengthen against other major currencies. The US Dollar further decreased to the value of 92.89 Lek, the lowest level since August 2. The British Pound was exchanged at 117.42 Lek, the lowest value since July 25.
The exchange rate has unexpectedly returned to summer levels, when currency inflows, mainly related to tourism, bring a usual seasonal effect, which this year was much stronger than ever before. However, the return to similar values even during this time of the year indicates an overvaluation of the local currency supported by factors more sustainable than seasonal ones.
According to currency exchange agents, the market continues to be characterized by a high supply of foreign currency, coupled with a low supply of the local currency. Large currency inflows this year are linked to record figures in inbound tourism, high levels of foreign investments, and a favorable year for the energy sector, characterized by growing exports, especially in the autumn months. These exports are believed to have played a role in the increase in currency supply in recent months.
On the other hand, liquidity in the local currency is quite tight. The annual growth of deposits in Lek has almost stopped, while the growth of the overall money supply in Lek (including deposits and cash outside banks) is the lowest since the beginning of 2019. A significant role in reducing the supply of Lek has been played by the government's tight fiscal policy and the budget deficit near historically high levels.
This year is closing with the Lek in a stronger position than ever before in the approximately two-decade history of the Euro exchange. December, in general, is associated with an increase in the foreign exchange supply, especially in its second half, linked to the return of emigrants and a seasonal revival of tourism. Historically, this has led to a certain decline in the Euro exchange rate in the last weeks of the year.